We got a signal last night from the McClellan oscillator for a big move and we got that today in the overall market. The Dow only lost 193 points on heavy volume. The advance/declines were 2 to 1 negative. The summation index is moving down. The S&P 500 was off over 1 1/2%, while the NASDAQ slid 2 3/4%. We had a short term buy signal that failed and the market did not bounce despite being oversold. This spells trouble with a capital T. When markets don't bounce as they should that is a sign of extreme weakness. Things could very well get real ugly tomorrow if the inflation data comes in strong. I'm hoping that it doesn't collapse right away as I would still like to try the SPY March puts on any kind of bounce higher. The broader picture has the S&P in a double top with a measuring objective to the downside of at least 5600. The NASDAQ weekly chart looks like it has put in a huge distribution channel over the past few months. That spells lower prices to follow. There's plenty of time in the March option cycle. In these types of declines there is usually a very strong up day that comes out of nowhere only to resume the decline to lower prices later. That is what we'll look for. Gold fell almost fifty bucks on the futures. The US dollar was higher and interest rates finished flat. The dollar rose as a haven but gold sold off. My guess is that gold was sold to meet margin calls because in declines you've got to sell what's worth something to cover things. The XAU lost six points and GDX dipped 1 3/8. Volume was average. GDX is almost short term oversold. The GDX March calls look like thay could be the next trade. The problem being that if the market tanks it will take the gold shares with it. That said, I might just place an order overnight for the calls and see what happens. Ideally I'd like to see GDX get down to 38 but it is almost to its lower Bollinger band and may simply stop declining there. We'll see. Mentally I'm feeling OK. The VIX turned around and shot higher today to finished above the important 20 level. That was not what the daily chart implied in my view as I was wrong there. Almost completely short term overbought here and another day like today would do it. There is room for the medium term indicators to go higher though. Sellers have the upper hand right now and we should not try and fight that. Asia was genrally higher and Europe lower overnight. Looks like it will be a fasten your seat belts kind of Friday to end the week.