US Major Indices Enter Correction Territory on Unprecedented Monthly Volatility Spike

After another volatile day of trading on Thursday, all of the nine US Major Indices closed down hard and four are officially now in 10% correction territory (with the others closely behind), as shown on the following graph, which shows their losses since prices peaked in January.

Here's a look at their 6-month daily chart. All of them are below their 50-day moving average.

The following monthly chart of the SPX:VIX ratio shows that the trading range of February's candle is the largest, in history, after only 6 trading days. Price has now entered into the "uncommitted zone" and is hovering just above the "fragile zone." Historically, price action on the SPX consists of wild, aimless/trendless and very volatile swings when this ratio remains below 150.

World Markets, in general had a bad day on Thursday, as can be seen from the graphics below.

Source: CNBC.com

Source: Indexq.org

Additional graphics show today's activity for US Major Indices, Sectors and Futures Markets...

Source: Barchart.com

Source: Finfiz.com

Source: Barchart.com

Finally, the MSCI World Index has dropped to its external Fibonacci retracement level of 1.618%, as shown on the monthly chart below. It has also fallen back into a long-term uptrending channel, after briefly popping above. A drop and hold below that level (2032.74) could send all world markets
into a tailspin.

Keep an eye on the 60 level on the SPX:VIX ratio, as a drop and hold below could spark panic selling in the SPX. In any event, watch for more volatile swings as long as it holds below 150, and, especially, 100.