The most interesting thing to take away from the past two years of going nowhere has been the continued, under-performance of those tech stocks everyone loves to own. For the most, and there have been small periods of exceptions, the Nasdaq has been the place big money doesn't want to go very often. The focus has been on safety plays. Lower risk plays with lower P/E's. Lower valuations over risk simply, because valuations are so out of line with reality. Tech stocks have those higher valuations, and quite often those higher valuations have led to some nasty blood baths.

That's not something you see nearly as often in the defense world of stocks, or the Dow and S&P 500 world of stocks. With earnings on the decline, it makes sense to avoid the areas that will get slaughtered on the first piece of bad news. In many cases, it hasn't taken any news whatsoever. Just being high-up on the valuation scale has been enough to see some nasty haircuts. Everyone should be aware that a true bull market is always led by froth and stupid valuations.

The no gives a darn approach to trading and investing. When defense is ignored. Just give me stupid valuations at any time and at any cost. That's a true bull market. In a nutshell, Disneyland at its very best. Bull-bear spreads go to 35+ percent, and often much higher as we saw in this past bull run. Today was a good example of what I'm speaking of. We saw all the real carnage take place in stocks, such as Google Inc. (GOOG), Apple Inc. (AAPL), and Amazon.com Inc. (AMZN). Others that have been acting poorly continues to do so. Stocks, such as Netflix, Inc. (NFLX), and Facebook, Inc. (FB), to name but a couple of them. The carnage in tech land was pretty much across the board. Biotech stocks hurt, once again. That sector has been in a bear market overall, with some nice counter-trend rallies for quite some time. Many of the top biotech names live in the Nasdaq. For now, it would be very wise to stay mostly away from the four-letter, technology names, with the highest valuations, and don't worry about missing some counter-trend rallies. Trying to catch those rallies is what often causes the most pain to your trading world.

Fed Yellen is losing all credibility, since her talk on rates two days back. The world knows she now has no insight as to what's really taking place with our economy. With that reality setting in, the market is selling off a bit more, so now the bulls have to turn their attention to the next big event to save their hides. That would come next Thursday when we get the vote of Brexit. If Britain stays, my guess is a decent rally would ensue. If they leave the Euro zone, my guess is the market will take a strong, left, upper cut to an unsuspecting, exposed jaw. To me there really isn't anything else out there right now that would be a big market mover. Since the market rarely moves based on truth, it will need some other, in-the-moment catalyst to cause a directional move. We would all appreciate this type of move, I'm sure. It would make things simpler, at least for a little while, and we'd all appreciate that. This back-and-forth, with one day meaning nothing for the next is on everyone's nerves. Brexit is not a small event. It is potentially a historic one, and the market won't be happy if Britain says so long. We wish the event was here already as it has been an overhang for the past two weeks as the rumors come out about what a given pole on the vote is saying. It changes daily, and, thus, is causing more and more turmoil. Certainty, good or bad, is what the market wants. It will have Thursday. A very sharp move is coming, and for that, we can be thankful, but what direction is very unclear.

Only thing that matters big-picture is the two pivot points. There's a lot of daily noise between these two pivots because of how far apart they are in price. If we lose 2035 on the S&P 500, the bears are taking control. Not a moment before. If we take out 2120, then the bulls have established a bullish move that should take the market to at least the old highs at 2134, and likely far beyond, even though, the breakout would be in to massive negative divergences. The market isn't as easy to read as it was years back, before all this Fed Yellen nonsense came to be the market. The divergences are so bad it's hard to imagine we can break out, but I put nothing past a fed-driven market with rates near zero. Again, only when the Nasdaq and the S&P 500 have come together to lose their 200-day exponential moving averages can we become more bearish. I would not suggest getting aggressive on either side of the trade until 2120 or 2035 go away with some force on a closing basis.

Hopefully, next week we will get a final resolution.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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