Perhaps, though, I ought to mention that the Russell 2000 hasn't gone anywhere in more than three weeks, so maybe yesterday's action wasn't that extraordinary.

Actually, the index is still at 830, the same level from which it fell in February. It hasn't gone anywhere in three months.

I thought of this as I was posting my charts last night.

During the tech bubble, I constantly noted how the Dow Jones Industrial Average had stalled out while the Nasdaq kept on going. Back then, people scoffed at me for worrying about the stalling Dow. How could I be so concerned with just 30 stocks?

Now, clearly, there must be something wrong with me because I'm concerned about 2,000 stocks!

On a more serious note, did you note how the complacency, which had crept into the market on Monday, didn't just disappear yesterday morning -- but immediately converted to fear?

There was a time when a correction off the highs was welcomed, and no one worried that it would become anything more than a mere percent or two on the downside. There was a time when every decline in the market was met with enthusiasm, not fear.

Now, however, every decline is met with fear and panic. People seem more concerned with missing the next decline than they are with missing the next rally.

We know that because when the market opened lower yesterday morning and failed to rally by 11 a.m., the put/call ratio soared in a mad rush to buy puts. The index ratio stood around 300% at midday; by the close, it was still quite high at 227%. And that was the end of the complacency.

I do want to take a minute to discuss the index put/call ratio. A high reading is actually bullish, as it means that people are scared and panicked. Only when that ratio stays persistently high for a long period of time does it become bearish.

When the 21-day moving average of the index put/call ratio goes over 180% (noted by the red line on the above chart), we tend to get a sell signal in the market. You can see on the chart where this happened just before Hurricane Katrina. It did so again in early May 2006 and then again in mid-February 2007.

At this point, it would take three more days of readings of 250% or more to get this indicator over 180%. That's asking a lot. I'll monitor it closely, but if it took a day like yesterday to get a closing reading over 200% -- not even to 250% -- then we're not likely to get three more days with such high readings. Nevertheless, it is possible, especially if the Fed says something unfriendly.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's primer.