When I checked the futures this morning, it looked like we would see a modestly positive open, and that is exactly what happened. But that positive note only lasted about an hour before the slide began. SPX hit a low of about $1842 about 45 minutes before the close and then bounced a bit to close at $1846, down $22 for the day. RUT closed off $15 at $1177. As you might expect on a day like this, volatility spiked up almost two points, with the VIX closing at 16.2%.

Trading volume spiked upward today, reaffirming the big bearish day. Trading in the S&P 500 stocks increased to 2.4 billion shares. Trading volume increased 10% on the NYSE and increased 12% on NASDAQ.

Today’s price action in RUT and SPX was the classic “outside day” on the bar chart or a bearish engulfing pattern in candlestick analysis. Either way, this is a strong warning of a possible move lower. RUT’s slow decline from March 5th through the 11th was indeed the “canary in the coal mine”. Now the question is whether the bulls will just jump back in tomorrow and drive the market higher as they have done so many times over the past year.

Take a look at the RUT chart and March 3rd in particular. The price action that day was very similar to today's, trading to an intraday low and then bouncing to close at $1176 (today's close was $1177). But then RUT shot up over $22 the following day. So I will be watching the markets very closely to see if we are really entering a correction or if the bulls are going to pull another whip saw on us.