The market action Friday and again today have pushed the bulls back onto neutral ground (at best) with the bears. This market is beginning to look seriously weak. I wouldn't have given you a plug nickel that we would see this type of action right here, but we are, and we have to pay attention.  

The levels to watch are 855-850 and then 820. If they break then a full blown retest of 740 may be in the cards. If 740 is reached I'd expect it to hold....at least for a while. Under that scenario the successful double bottom re-test crowd will be out in force. If 740 fails, then all bets are off. We'd all see what real panic is then.

The market can still salvage the bullish case. To accomplish that it'll need to jump up from anywhere between here and 850 and rocket back over 920. Don't think that can't happen because it can.

Oil, gold and other commodities all continue to be weak. That's not good. It's indicative of continued liquidation in all asset classes, which is pretty much what deflation is all about.

I've been expecting this pattern to re-emerge in about May, not now. As a result, I'm holding out the possibility that this weakness is simply a give back of some of the strength we've seen. That may be wishful thinking, but it's still possible.

The financials are leading us down. That may be the biggest clue that we're going down now instead of later. It won't take much for the financials to breach their November lows. Watch the XLF, RKH and the BKX. The BKX is already near it's closing low in November and the others aren't far behind.

The Feds can't be happy with these developments. I wouldn't be surprised if they announced that they were THINKING of targeting stocks just to put a shock into the system. Remember what bonds did when they announced they may target longer term interest rates. I have NO inside knowledge that they're about to do that, just don't be shocked if they do. I imagine they're pretty desperate right about now. Desperate people do desperate things.