The FOMC announced the much-anticipated Operation Twist today and that produced some very persistent selling.
It was quite a different reaction than what we have seen on prior moves by the Fed and may indicate that market participants have lost confidence in the Fed's ability to be a positive force. The endless supply of cheap funds has obviously not done much to solve our economic woes and with the Fed running out of ammunition, the buyers weren't very interested that this time our problems would be solved.
The biggest problem I see is that a lot of poor action has been covered up by some recent strength in big-cap names. Financials, commodities, China names, small-caps and so on have been acting poorly for a while.
The recent move up was driven almost completely by a small handful of big-cap stocks that dominated the indices and may have given a false sense of confidence to some who have not been tracking the underlying action as closely. This market has been sick for a while, and this reaction to the Fed news merely confirms it.
With the rollover action today, the market is right back in the middle of the trading range that has been in place since early August. This is the third bounce that has been turned back.