1:00pm (EST)

It is rare that the market follows your road map on where you think it is headed but when it does it feels like you are following the yellow brick road…literally.

Futures were already pointing towards a nasty open this morning and the bears are following our game plan to a tee.  The talking heads seem worried but keep mumbling about how we are “holding” levels and that we have bounced off the “bottom”.  Please don’t get fooled by this technical jargon:

“The Dow is ONLY down 185 points now”…

“We are bouncing off the lows and we’d be buyers here”…

Folks, the market is in correction mode.

As we type, the Dow is currently down 179 points, or 1.8%, to 9,887.  The index has traded to a low of 9,774 and we mentioned how the 9,800 level would come into play.  If the bears can get a close below this level then you know where we are headed.

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The S&P 500 is lower by 18 points, or 1.8%, and stands at 1,055 after touching a low of 1,040.  We mentioned the 1,050 level as the key battle ground and look where we are at.

The Nasdaq is off by 40 points, or 1.8%, to 2,173 after kissing 2,140.  We have now broken through the 2,200 level again which only leads us to believe that 2,000 will be challenged.

As far as economic news, a disappointing report on home prices added to the onslaught as the Standard & Poor’s/ Case-Shiller home price index fell 0.5% in March from February.  Although U.S. home prices rose 2% for the quarter, it was another sign that housing remains sketchy despite mortgage rates that are at rock bottom levels.  We have mentioned time-and-time again that the housing market will be key to any sustained rally.

Elsewhere, the Conference Board gave the bulls something to cheer about after they said the consumer confidence index rose for the third straight month, climbing to 63.3 in May from 57.7 in April.  The pencil pushers had expected a reading of 59.

We market has a bounced off the lows today and it remains to be seen if we retest them or if the bulls make up some ground into the close.  Either way, if we close below the aforementioned support levels it will only reaffirm our hunch that the bears, not the boys, are back in town again…the bears are back…the bears are back… 

We thought we would leave you with a little Thin Lizzy as we prepare for the worst and hope for the best.  Subscribers, check the Members Area for the updates.