You know, it's not Tuesday's loss that concerns me. What concerns me is how the market started the day out on such a firmly-bullish foot after yesterday's stumble only to give it all back... and then some. The bulls had every reason in the world to plow back into stocks again, but rather than sustain the rally with a little buying, they backed down. At the same time, we saw another red flag suggesting the undertow is still bullish. Yet, our big line in the sand remains intact, meaning there's still a glimmer of hope for a trade-worthy rally. Let's just dig in, beginning with a chart of the NASDAQ. It is what it is. The composite briefly traded above the 20-day and 50-day moving averages for a bit today, but when push came to shove the bears won the battle, sending the NASDAQ back below those important battle lines. Now, this still isn't a reason to freak out. We mentioned to you yesterday the 100-day moving average line (gray) at 4593 was the only line we really cared about, and this philosophy hasn't changed. Based on this premise, we can't say the NASDAQ is in a meaningful downtrend yet. But... The selling volume was fairly brisk today. That's a subtle clue of more bearish thinking than bullish thinking. Equally alarming is how the VXN is firming up its uptrend. This is another subtle clue of a growing bearish mindset. This is at least a little alarming, in that people tend to trade their convictions and create a self-fulfilling prophecy. If the market is thinking bearishly and getting defensive, it may be a clue worth noting. Again though, we can't assume the worst until 4593 fails to act as a floor. In any case, while we're more focused on the NASDAQ than the S&P 500 right now, I'd still like to switch gears a bit and look at a weekly chart of the S&P 500, since it's this chart and this timeframe that should worry not just short-term traders, but even those of you who are strictly buy-and-hold folk. We're not talking about a bear market, but we are talking about a good-sized dip. Here it is. The S&P 500 is falling, but as you can see, it's only falling back to the lower end of a long-established (and rising) trading range. We can fall all the way to the lower end of the range at 1989 and still not snap the bigger uptrend. So what's the concern? It's the VIX, which right now is a little easier to read than the VXN. We've had this discussion before, but it bears repeating now - the VIX is acting like it has every intention of pushing above a ceiling at 21.5. Yes, the VIX popped above 21.5 a couple of times late last year, and those surges didn't kickstart a major meltdown for the market. This is different though. This time, the VIX is making its move with a bit of a well-paced running start. Maybe it'll be nothing. Maybe the VIX has already brushed this ceiling and started to pull back. I don't think that's what this is, however. This looks like a true budding uptrend. If it is - and if we get a corresponding break under the floor at 1989 from the S&P 500 - then we have reason to be worried and perhaps batten down the hatches, so to speak... at least for a few days. We'll be using any dip as a buying opportunity, but we'll talk about that more when the time comes. Heck, we haven't even begun a major correction yet. It's pretty clear what we need to watch, however. More tomorrow. Let's see just how serious the bears are at this point. You Asked, We Answered We just wanted to give a quick shout-out to everybody who's sent in comments and questions of late. Some we responded to directly, and some we've thought about how we can best respond to here in the newsletter, since it's an answer we'd all benefit from. We got one such question yesterday. Charles writes: "Hi, I live in the UK and read your newsletter. Your comments today re the US employment figures are interesting however it would be interesting to see them in the context of job vacancies. We have often seen figures where the vacancies are high yet we still have high unemployment. That would suggest that other factors are coming into play." Thanks for the note, Charles. I don't know if you're talking about job vacancies in the US or the UK, but I'm going to assume you meant the United States. [I don't have ready access to the UK information anyway, so....] As it turns out, we got the only official US job-opening data I trust today - the JOLTS (job openings and labor turnover survey) data, from the Bureau of Labor Statistics. In a nutshell, the job-vacancy data aligns with the unemployment trend and total-employment trend. That is to say, the number of job openings is increasing with all the other measures of employment growth, as it should. Take a look. It's the data on the bottom half of the chart. The top portion of the chart is the average hourly wage for US workers. Remember how everybody was flipping out on Friday because hourly wages went down last month? This chart puts it in context. You can barely even tell hourly income pulled back. And, what this chart doesn't show is an inflation-adjusted hourly wage, which actually went up last month. Frankly, I'm surprised hourly wages haven't fallen sooner and farther recently. Inflation (or lack thereof) impacts everything, for better or worse. That includes paychecks. In any case, to respond to Charles' comment, if you're talking about UK data, I don't know. If you're talking about US data, however, all the data is saying the same thing - the employment picture really is getting better on all fronts. You are correct, however, in your concern that it's possible to have high job-vacancies AND high unemployment. It's just not happening here (in the United States) right now. The only other thing I'll say about this data is that I know there's concern about the lack of quality, decent-paying jobs. This may be a legitimate concern, but the data above doesn't address this. In fact, I don't know if there's any wage-breakdown data out there. [If you know of it, please let us know.] Until we get proof of otherwise, we're going to interpret our data at face value and assume the wage stratification that existed before 2008 still basically exists now. 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