The move down this week was not associated with a lot of panic selling. The VIX, which is an index of fear, was relatively high at 46 but did not spike to the high levels that were seen when we last hit the lows in the market as we are doing now.  The January 20^th low in the SPX posted a high in the VIX of 57, the November 21^st low of 741 saw a high of 81 in the VIX. 

It almost feels like a slow methodical death.  However, I interpret this not so much as selling but lack of buying.  Again, this scenario lends itself toward a vicious rally that will be enhanced by short covering.  The question is when will that happen?  We are getting to territory that hasn’t been seen for ten plus years.

  Fundamentally, there are many questions that still need to be answered regarding the financial crises and Obama’s stimulus package.  I feel that the bulls will not stay out of the game much longer.  There are massive amounts of money just sitting on the sidelines and when the move happens, it will be quick and large.  Do your due diligence and if it feels right then position yourself for that move.

We are currently at critical levels of support.  The market will tell you which way it wants to go soon.  Keep in mind that any move could be a head fake, but is much less likely to be a false breakout if it is associated with big volume.  Best, Robin

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