It had to happen eventually. The bears thought it was going to happen last week but the market refused to sell off on all the big news events. We just finally ran out of positive catalysts and, with the dollar reversing strongly to the upside and precious metals in an outright frenzy, we finally had a big intraday reversal.
The action was worse than indicated by the indices because there were so many big intraday reversals. Silver, in particular, stung a lot of the momentum players who have been chasing the move in that metal. Silver is back to where it was two days ago, but the folks who were buying yesterday (and especially this morning) were really whipsawed.
Volume picked up so we have the first day of technical distribution in quite a while. Typically, it takes a number of down days on heavier volume to kill an uptrend. Today was just a warning that we need to be more careful and watch for further developments.
Tops are typically are processes that play out over several weeks. Markets with strong momentum don't typically just roll over and go straight down. Dip buyers will be confident on the first couple pullbacks, and the bulls will tend to dismiss softness as healthy consolidation. It is when the bounces fizzle out and the dip buyers are caught leaning the wrong way that downtrends tend to develop.
It was a poor day, but the overall character of the market has not yet shifted.