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Here Is The Test For The Bulls

Yesterday's 200 point decline in the Dowwas accompanied by some of the heaviest volume we have seen in a while (exempting Friday's volume, bloated due to Quadruple Witching expiration).

On top of that, Monday's trading qualified as yet another 90 percent downside day, where 90 percent of the volume was on the downside. This is the second 90 percent downside day in a week, following last Monday's.

Lowry, the oldest technical analysis service, noted this morning that "the development of two 90 percent Downside Days in the past 6 trading days is the most weakness exhibited by the market since the rally from the Mar. low began..."

Some of this is being distorted by the end of the quarter and the Russell reconstitution, which is ocurring at the end of this week.

So here is the test for the bulls, who have often said that the there are many traders with additional cash who would come in, "if only the market corrected 10 percent or so."

A 10 percent correction in the S&P 500 is 850--and that's where the bulls say there will be buying. We are currently at 890. We'll see.

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