The Bears Are Winning Right Now.....

With the failed bounces lately, this market is undergoing a change in character. Over the last six months, nearly every time we pulled back and started to bounce, we just went stronger. The bears were squeezed and under-invested bulls were forced to chase entries higher in order to add some long exposure.

The action today was much different to what we saw in the big rally last year. We did rally off the morning lows, but we never saw any really vigorous action, and other than AAPL, PCLN and a few oils, there wasn't much leadership.

Then, instead of gaining strength at the end of the day, like we did so often last year, things fizzled and the selling pressure intensified. Even AAPL and GOOG gave back big chunks of their gains.

It was the banks that led the big reversal. There was talk circulating that the Treasury Department is already drafting up some of Volcker's bank restrictions, as discussed by President Obama last week. Both GS and MS sold off hard on speculation that they would have to give up their bank charters and could go private.

The overall action is quite different to what we have enjoyed for a long time and not in a good way. We are suffering some significant technical damage, the news flow is negative, even though earnings are quite good, and the dip buyers have suddenly lost their verve.

Tomorrow, we have the much anticipated announcement of the Apple iTablet, the Fed interest-rate decision and President Obama's first State of the Union address. We also have plenty of earnings reports to move things around. Yahoo! is coming up tonight, but that is more nostalgia than significant.

A lot of the pundits on CNBC are trying to explain why the market has weakened. You don't need an explanation. All you need to understand is that the market was technically ready to correct and, therefore, the news will be viewed with a negative bias.

We are undergoing a correction. We will likely see some bounces, but this time it is different and the bears are gaining the upper hand (for now).......

long AAPL, GOOG, GS