"Ideas that require people to reorganize their picture of the world provoke hostility."

-- James Gleick

NEW YORK (REAL MONEY) -- A gain of 113 points in the DJIA helped to cover up some very depressing market action on Friday. Largely because of a strong report from Nike (NKE) - Get Report , the Dow put on a strong show, but under the surface, there was some particularly negative action.

What was unsettling about the action was that the market failed to hold on to early gains that were created following comments by Janet Yellen that a rate hike was still likely before the end of the year. The market had reacted negatively to dovish comments from the FOMC a little over a week ago, so it seemed logical that it would be happy to hear some hawkish predictions -- but that wasn't the case at all.

For a very long time, the Fed and central bankers around the world could do no wrong. The market celebrated every move they made. They have produced wave after wave of cheap money and it had few places to go but into commodities and equities. The bulls would constantly justify their optimism with the question "where else are you going to put money"?

The central banker magic is now starting to wane, and that is producing a major change in market character. The big question that is weighing on the market is why, after six years of near zero interest rates, is economic growth so poor?

The Fed seems desperate to prove that things in the U.S. aren't that bad. A hike of a quarter point will allow it to proclaim "mission accomplished". Fed policymakers are still pushing to do just that, but the problems in emerging markets, and China in particular, keep spilling over and making a push toward hiking rates seem ill advised. While the market wants the Fed to be optimistic enough about growth that it can raise rates, it is worried that it will be the wrong move and may exacerbate the problems that already exist.

The central banks and the Fed in particular just aren't able to drive the market upward like they once did. It is a major change in character and requires that we change our style and adapt.

The gain in the DJIA on Friday probably hurt the market more than it helped it. Under the surface, biotechnology stocks were slaughtered. This has been the leading speculative group in the market for quite a while, but the iShares Nasdaq Biotechnology (IBB) - Get Report suffered its biggest loss in years, with a pullback of 4.9%. This capped off a week when the group plunged over 13%.

This action in biotechnology is a particularly good example of how in bad markets all leadership is eventually destroyed. This has been a safe harbor for many traders since the corrective action began back in August, and may were caught by surprise on Friday.

Some bulls will be telling us that the market is "oversold" and ready for another bounce. Maybe so, but the big picture here is not a pretty one. We have been in a trading range for more than a month and failed badly at the upper end following the FOMC decision. We are now testing the lows, and it is extremely important that we not dip too much further and test the lows of August. The bulls need to make a stand and hold things up well enough to entice some buyers to put money to work.

It is the end of the third quarter this week, which will produce some portfolio shuffling by funds. That means selling losers and trying to find something that looks more attractive. When you are down for the quarter, window-dressing does not tend to be the same positive source that it is in a good quarter.

We are looking at a weak open and a gloomy mood this morning. The dip buyers have not been able to do much recently, but I expect to see a try again this morning. We need a good close for a chance to improve this market. In the meanwhile, stay defensive and protect that precious capital.

At the time of publication, James "Rev Shark" DePorre had no positions in the stocks mentioned.