We continue to see the market deteriorate as the Dow fell 121 points on pretty heavy volume. The advance/declines were negative once again but not as much as expected considering the overall market weakness. The summation index is still moving down. The overall market was much weaker than the Dow with the NASDAQ continuing to lead the way lower. The NASDAQ is now clearly below its 50 day moving average and implies even lower prices going forward. I'm back to being cautious as my thesis that things would turn around here and head higher was wrong. I've been leaning to the bullish side but the market has proven that to be incorrect. The Dow is holding up here but the S&P 500 closed back at its 50 day moving average. Another day like today and that area of support will be violated as well. We are getting close to the lower Bollinger band for the S&P and perhaps that will keep things in check. Still waiting on Fridays jobs numbers for the next excuse to buy or sell. GE bucked the trend and was up 1/2 on very good volume. Gold was off over $20 on the futures as the US dollar was slightly higher. The XAU shed 3 points, while GDX lost 5/8. Volume picked up to the downside. The gold shares did finish off of their worst levels of the session. I am still looking at the GDX March calls but trying to remain patient. The gold shares have been acting better than gold itself and that is a positive. They are oversold on both a short and medium term basis. The trouble is that the fundamentals don't favor gold at the moment nor does the seasonality. The recent ramp up in interest rates has provided headwinds for stocks and that applies to gold as well. Though rates remain overbought there is nothing that says they can't simply stay that way. It seems to me that gold is trying to hang in here at the $1700 level and if it does there should be a tradeable rally in the short term. Mentally I'm feeling OK. The VIX had a spike today and closed above its 200 day moving average. The short term indicators for the VIX remain close to mid-range but if they turn back up we could see a significant decline. I'm not saying that will happen but it could. We're also almost to the top of the Bollinger bands for the VIX here. Europe and Asia were both higher last night. We'll see if they follow the US lower on Thursday. I'll be keeping an eye on the overnight developments.