I've mentioned this theory of mine in the past and the similarities just keep getting stronger.
Theory is that this drop may have a few reasons that are touted by the media...but quite frankly I believe things like Japans coming interest rate rise, Iraq, Iran, inflation...blah blah blah are just being used by the big smart money to drop the market after they have got their premium prices for small and mid caps and then to complete rotation into the big caps.
That doesn't mean that RUT, MID and SML are toast..it just means that the big caps will lead what could be a tremendous rally in relative strength of OEX and to a degree..NDX.
I've posted charts below of 1994 and present day daily and weeklies for comparison purposes. There is also a monthly VIX showing the same type of spike similar to that period. The ratio chart I posted way back in Oct. of last year suggesting that we were about to enter the same type of action..although I expected the drop to start in April..........we got it starting in May instead.
Below are also charts of the weekly NAAD cumulative with a possible bottom spot at the breakout point...that is going to be somewhat important to hold if my theory is to hold up. There is also a chart using the anchor point from the crash of 87 that also makes the 542/44 OEX area important and if it holds......very bullish.
Also below is a daily NDX which I think is sending a subtle clue that although deep...this drop is corrective not impulsive....the C waves make it seem impulsive. Take the count on that chart for what it's worth....whether we get an X wave or not is up in the air. It's the three wave drop off the January top that I'm pointing out...it wasn't a fiver.
My gut says NDX will bottom with SOX hitting the Oct. low at 413 but that's another story and not the point here.
If OEX does come down for 10% correction off the top to 542/44 and holds....that would put SPX bottoming in no mans land (bear trap) somewhere between 1190/1200 and everyone will be convinced that the sky is falling and bearishness should be rampant. I've also put a weekly chart at the bottom and drawn in a TL that "could" become a channel bottom.
Note the SPX:VIX breakout point from the oct 02/mar03 lows on that last chart. All of this is totally dependent of OEX being able to hold that 542/44......a close below 540 would put very serious doubt on the scenario. Sorry for the long winded dissertation.
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GREAT POST, WELL DONE. 
