The past week, it seemed markets were ready for a nice rip to the upside, on at least a couple of occasions.  That is something actually, as since late August the bulls have been struggling to string some momentum together.  While Monday was a solid win, the sellers came out in earnest the next day with a gap down and close lower that did not give the bulls a chance.  Friday seemed to be all about the upside, given the big rally off the monthly lows the prior day.

A 25 handle gap up in the futures was sold down mercilessly.  The internals were deteriorating all day long, so it was really no surprise when the futures went negative.  Notable was the weakness in Nasdaq and the Russell 2K, part in parcel to the deep losses in biotech.  Though the Dow Industrials were shining all day long thanks to Nike, that stock was only one in a handful to close positive on the day. 99ibb 092515 Bear market rallies tend to be strong and often elusive unless you are willing to guess on the outcome, like Friday.  If you decided to go long Thursday, you guessed right.  But if you stayed long, you most likely gave it all back.  This market is not giving you much chance to take a breath.  That is sign of an unhealthy market environment.

This is bear market action. Period. There is just no spinning it any other way, and eventually all stocks will get hit - and hard (if it hasn't already happened).  Now, the Fed has been a huge boost to equity prices, that is well understood.  But with policy shifting on the horizon as the committee sees more influences that could cause inflationary expectations to arise, they are likely to be more proactive with tighter policy - sooner rather than later.

Take a look at the SPX chart.  We can see several doji days this week, which measures up to indecision.  Answer me this:  If prices are at such a bargain now (as many would have you believe), some well over 20% lower and the indices about 8% off their highs, why is there so much indecision?  The price action tells the truth - always.  It is poor and prior leaders are faltering.  Friday it was the biotechs (see IBB chart), which were taken down particularly hard across the board.  A former leader now has made significantly lower levels. 99spx 092515 A bearish chart pattern that keeps coming up is the evening star, correctly noted by my good friend Rob Moreno several times over the past month.  Rob reminds us this pattern shows a doji top and confirms the move the next day, which is a pattern gamechanger.  At least three of these have shown up in September, and another one may have occurred on Sept 25, with another down day there will be more downside to come.

While you may look at the indices and believe this is just a short-lived correction, the action has me more concerned.  Time is always a major factor, and prior corrections were always short and sweet.  Over the last few years we have often seen a V-shaped bounce, a scary nosedive and then very sharp recovery. This time however, by all standards is not a correction in time that we are used to.  So far, prices have remained lower for well over a month and though prices did rally sharply they only met strong resistance and resumed the downtrend.  I suspect this will continue onward as the journey to lower prices continues.