NEW YORK ( TheStreet ) -- The first cracks in the market's armor appeared yesterday as investors shunned stocks and sent the indices plummeting. By the end of the day the S&P 500 was down 1% to close at 1281 and the Russell Small-Cap index was down 2.2% to close at 787. On the surface a 2 plus percent drop in the small caps seems like a lot -- but it's really not. To put things in perspective, the Russell advanced from 600 in September to 800 in mid-January, a 30 plus percent increase, without much resistance. The five-year chart below shows that the index would need to fall closer to 750 before a major support level would be in danger of breaking. That level is 4.7% below yesterday's close. At the open today, it looked as though we might be headed straight down to 750 -- the Russell immediately dropped to 776, but has since bounced back. The relevant questions now are: where will stocks go next, should you take this opportunity to buy, or should you sell out of some positions? The first is impossible to answer without multiple caveats. My outlook is that individual stocks will decouple from the major indices and will start to move on more stock and industry specific news. I believe that the broad market will become increasingly volatile as this decoupling happens, and that index investors will not see much difference in the value of their holdings. In short, I believe it's time to rebalance your portfolio. Doing so should help protect you from the downside, lock in some gains, and better position you for future gains. My outlook necessarily means that it's increasingly important to monitor individual positions. The time to act will be soon, but not before having a plan. We need to see the bears overpower the bulls before heading for the hills. If the bears win in the short-term, then it is likely that nearly all stocks will shed some of their recent gains, and it will be good to lighten up on the positions that you have less conviction in owning.