MARKET COMMENTS: Wednesday's market got ugly fast after a gap down on horrible...I mean truly horrible...retail sales numbers along with a big hairy eps miss by JP Morgan. At one point the DJIA was down over 350 points. This was a big disappointment for the bulls who, after 3 days of strong selling, were hoping to get the major indexes back on track.

The S&P stretched into territory below its recent trading range, and even broke its YTD low, suggesting pretty severe technical damage being done to the charts. But an afternoon rally erased about half the loss and kept the uptrend support line intact. Still, as the chart below shows, the price pattern -- a "rounded top formation" -- belies increasing weakness in the chart.  We also see Relative Strength flatlining here, and the On Balance Volume indicator, which is a good marker for where money is flowing, hitting new lows.  It's doing so because the volume on the down days has been stronger than the volume on the up days.

Tomorrow we get Bank of American and Citigroup reporting before the bell and Intel after. Technically the market is poised for at least a short term bounce off a mini-double bottom. But a gap up could get sold into, just as the previous two bullish gaps were sold. And more problems from the big banks, combined with a sharp drop in PPI (more than what is expected in light of lower oil) could trigger the kind of selling we saw in early October last year. So, with all that on the table,we'll be staying pat tomorrow. Our open positions worked well today and as the old saying goes, when it ain't broke, there's no sense in fixin' it.

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