The major reversal yesterday on good news was the hint that a terrible day awaited the bulls.  TRIN is finally closing at a panic level, but many are wondering about the complacent VIX.  During the 5 day monster rally end of June we did not get any reprieve until the VIX became jumpy for a couple of days.   

Money rushed into long Treasuries while the Swiss Franc went parabolic as worries in the Euro Zone escalated.  The Euro Zone meeting tomorrow on Spain/Italy debt and the jobs number on Friday are keeping buyers cautious into the close.  

We finally started to see some of the large cap stocks starting to sell today and some panic set in at the close.  One of the concerns is that select large cap stocks have not shown the same weakness and once they play catch down we could have a severe second leg down.  Volume was heavy again notching another huge distribution day below the 200 day moving average.  

One thing the bulls will be focusing on as the Federal Open Market Committee’s interest rate decision early next week and the possibility of some sort of QE3 hint.  One scenario I am entertaining is the possibility of a quick bounce to the 1295 area on a positive ADP report or any good news on the economy, but from 2008 I have learned that breaking the 200 day moving average does not guarantee a back test of the break down area.