In yesterday's blog I wrote:
" It would not be unusual, therefore, to see this market take another correction from a top in this new reversal zone (especially if the DOW cannot clear that high - 21,169 - soon).
We entered this new reversal zone yesterday (its center point is Friday) so today's plunge in equities is a bit early. The DOW's recent sub-cycle top was on May 9 so we will watch for a bottom in this new reversal period (now through next Wednesday). Because the S&P 500 and NASDAQ made new all-time highs yesterday, they could make both a top and a bottom in this new reversal zone. Of course, today's sudden and substantial drop puts us on alert for a more serious correction. As I mentioned yesterday, we don't want to see the DOW or S&P 500 drop below the lows that started their new cycles (20,379 in the DOW and 2,322 in the S&P 500). That is the main line in the sand for our long positions. Holding my long position in the broad stock market for now.