If today was the rally's first test then I think it's fair to say that it failed with flying colors! If you read my entry from Saturday then you weren't taken by surprise at the appearance of a pullback. However, the depth of this pullback was a staggering 8.9% on the S&P! WHAT?? I've got to admit I wasn't expecting that in ONE DAY. Two to three days, yeah sure, but not ONE!!

As a result, I'm not as sure as I was last week that we've seen the bottom of what I call this "phase one" decline. In fact, if this market continues to cascade down tomorrow I may have to reconsider my November 1929 to April 1930 time frame comparison for what we can expect next. That called for a significant rally into the spring before the real damage began.

It's possible, and I'm beginning to look seriously at this idea, that we're already in the 1930-32 liquidation phase of this decline. If that's the case then no rally will be immune to the wave of selling that will just continue unabated until no one is left standing.

At the end of that phase people will laugh at and ridicule anyone who suggests investing in stocks. CNBC will no longer be on the air. Jim Cramer will either be in hiding or in a mental institution, maybe with Larry Kudlow. Whoever's President won't bother running for re-election. Don't laugh. We're already on the path there now, you just may not realize it yet. 

For the bullish "the bottom is in" case to hold any further water, the market must hold these levels and reverse almost immediately and reclaim Fridays highs. It sure feels like a tall order as I sit here tonight. 

Right now I'd be neutral. As certain as I was Saturday about Mondays prospects, I'm just as uncertain about what will transpire Tuesday. The magnitude of todays decline is trying to tell us something and I'm not quite sure what it is. Maybe I'm deaf!