History was made on Thursday, as the Dow traded down 999 points at one time during the day. In retrospect, we now know that part of the problem was supposedly caused by a faulty computer order and perhaps by the whole dark pools/high-frequency trading that exists these days. The market recovered most of the computer error, to finish down 347 points, but it would be pollyannaish to think that the selling is over for good. At today's close, two months of gains have been wiped out -- mostly in just three days.

The technical indicators have gone from overbought to oversold. $SPX broke down below 1180 on Tuesday, thus turning its chart negative. You can also see that the long-term trendline for the bull market has been broken.





Equity-only put-call ratios have been on sell signals for several weeks now. The remain on solid sell signals until they roll over and head downward.




Market breadth has been wildly volatile, but is on a sell signal now and is very oversold.




Volatility indices exploded this week. Even before Thursday, both $VIX and $VXO had established themselves as being in uptrends, as they had made a pattern of higher highs and higher lows and that is intermediate-term bearish for stocks.




In summary, the market has once again proven that low volatility environments lead to big trouble. This one came much sooner than most had expected, I think. However, there are no true buy signals in sight from our indicators, so it is not a time to go long yet. In addition, there is sure to be a general level of disgust with the market mechanics after what happened on Thursday -- among both retail and professionals alike.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, recognized as essential resources for any serious option trader's library.