Markets had one of the worst weeks in the past year this week with VIX increasing and fear entering markets again.

Is this start of a big correction or is it just another little pullback?

Well – for now it looks to me that it could be start of a larger correction to the downside. SPX and Dow Jones both broke below MA50 which tells us bulls need to be careful.

Very short term charts remains oversold so I would expect a rebound either way ,, so early this week expecting upside , but late this week I think we could sell off some more. We got FOMC this wednesday so we might move UP into FOMC ,, and then a move down after.

1. VIX remains very elevated now and expect a short term pullback on VIX before higher (this means markets could rebound before going lower)

2. NYSI suggest mkts very overbought and is still on a buy signal so far,, however could turn to sell signal soon with mkts going down – so this is actually most bearish looking

3. Gold had an amazing start of 2014 ,, expect a brief pullback on Gold/Silver before going higher imho.

So my main view is this – that markets topped out and has started a larger correction. However we cant really be sure yet ,, but to me it looks quite toppy with a lot longer term bearish divergences. IF we started a correction I would expect SPX to drop 100-200 points from current levels. Short term charts suggest that we should get an early rebound in mkts and after FOMC it is possbile we will sell off further.