I'm sure Thursday caught many investors by surprise, as the markets plunged lower following Wednesday's weak attempt to rally after the Fed's announcement that they would leave the Fed funds rate alone.

The carnage was across-the-board, as it took all of the major indices down over 2%. The worst damage was the Nasdaq 1000's 4.06% drop, which I cautioned investors about last Friday.

This time the damage wasn't just done in the Dow Jones Industrials and the S&P 500 like in the past. The weakness also aggressively spread to the Nasdaq Composite Index, small-cap and mid-cap indexes.

I often write that is important for investors to block out all of the talking heads and media that do nothing but comment on the market's day-to-day actions and pay attention to what the market itself is telling you. It will often give clues about what it is likely to do over the short to immediate term.

Those clues were present last month when I wrote in my column on May 16 that after the recent move the S&P 500 was likely to have a correction that would begin anywhere between the 1400 and 1450 level. I stated that the key would be for the S&P 500 to hold above the 1350 level on any correction or we would likely visit or break the March lows.

Now that it is happening, we should look at what investors should expect going into the next few weeks.

To do so, we need to take another look at what the institutional money is likely to do going forward. That is what is going to move the market.

The Nasdaq Composite Index has completely broken intermediate-term support and is now a solid downtrend. Technically, we may see some type of bounce over the next week or so, but anything less than a move back above 2400 would do nothing but bring in more sellers. Unless that move happens, it is likely that the index will come close to or at least test the March lows.

Click here for larger image.
Source: TC2000

The iShares S&P Small-Cap 600 Index Fund ( IJR) also took a hit on Thursday, dropping over 2% by the end of the day. You can see that over the last month that the down days have come on heavy selling pressure from institutions. That is represented by the large red volume bars.

You can see from the red lines that have drawn on the chart show that this index has broken its intermediate-term uptrend and $62 support level. That means there is also a good chance that we will lease see a test of the March lows in the small-cap arena.

Click here for larger image.
Source: TC2000

The S&P Mid-Cap 400 Index ( IJH) has been one of the strongest areas of the market, but that also changed Thursday as it decisively broke below its intermediate-term support. It will be important for this index to hold the 800 and 825 levels or the same fate of the March lows may also await.

Click here for larger image.
Source: TC2000

There is a high probability that we will see some type of sharp bounce over the next week, especially in the large-cap stocks. The strength, participation and leadership by stocks in that bounce will give us a lot of information about what the market is likely to do next.

I want to make readers clearly aware that I am not trying to call tops our bottoms in the market or make predictions. What I am trying to do is teach you is to block out all of the information overload that you get from the media, and to just pay attention to what the market is saying. The charts are like x-rays that shows the internal health of the market and it is important to pay close attention to them. Are they always right? No, but they are an important tool and they definitely give you a definitive edge.

There is an old adage that says investors are often wrong but the market rarely is. That doesn't mean that there won't be overreactions to the downside and upside that will create opportunities, but it does mean that the market often shows its hand well in advance if you play close enough attention. The market is speaking, so turn off your TV and pay attention.

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At time of publication, Manning had no positions in any stocks mentioned in this column, although holdings can change at any time.

Mark Manning, AAMS, is an Accredited Asset Management Specialist and Registered Investment Advisor with Butler, Wick & Co., where he specializes in wealth management. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Manning appreciates your feedback; click here to send him an email.