The outstanding performance for equities which sent many major indices to record highs may have just paused. Asian stocks were trading broadly lower on Thursday after the markets notched its first daily decline in 2018./ It was neither economic data nor earnings that prompted the declines, but rather the selloff in U.S. Treasuries which sent 10-year yields to a 10-month high.

Open interest records: VIX futures hit a new record for open interest with more than 673,000 contracts on August 7, and VIX options reached a new record for open interest with 14,783,380 contracts open on Aug. 15. Volume records: Aug.10 was an all-time record volume day for both VIX futures (volume of 942,109 contacts) and for VIX options (volume of 2,538,121 contracts).

On a historical basis, yesterday's drop isn't particularly significant. As Eddy Elfenbein at Crossing Wall Street noted, "Last year, the S&P 500 had 48 days in which it closed up or down by more than 1%. In 2015, there were 72. So far this year, there have been seven." In other words, yesterday's fall only feels so large because we've been locked in one of the lowest volatility environments ever for the past few months. Remarkably, the S&P 500 has yet to see a 3% peak-to-trough drawdown since election day, over nine months ago.

Crude oil prices are selling off in fear! Fear that a falling stock market may slow demand and fear that a prediction by the International Energy Agency (IEA) that oil demand might be lower, might be right this time. Yet, the biggest fear that is rattling at least one major commodity brokrage firm is the exposure to the short volatility trade.

It’s been a long season of disappointment for the bears. Chalk up another one. Once again, the Dow came to edge and didn’t jump. Tuesday was the big day. Markets started dropping like a rock on the apparent news of yet another “Russian collusion scandal” involving Trump’s son. You know all about it. But by the time it started turning up news broke the Senate decided to stay in session for the better part of August. Markets turned up and fully recovered.

Here’s the good news, 8,000 jobs were attributed to mining and any jobs in that beaten down arena is welcome. But 37,000 jobs were attributed to health care. Why isn’t that good? Some of you will recall the only reason Obamacare exists is that Fannie Mae and Freddie Mac have been looted to the tune of billions. It is called “Net Worth Sweep.” It was first reported months ago by Jerome Corsi but confirmed several weeks ago by Mnuchin on the Maria Bartiromo show.

The big story of last week appeared to Macy’s. They had a bad earnings report and gapped down. Here’s my question. They topped last November, why worry about it now? Normally, this is the kind of bad news that would create a wash out low. But how could we have a wash out low on bad news when the VIX is so close to record euphoria?

For a period, when the Fed was considering tapering its asset purchases, it seemed like every day was either a "risk on" day, where stocks, higher-yielding currencies and commodities rallied in sync, or a "risk off" day, where bonds, gold, the dollar and the Japanese yen led the way.

So what about these charts? We have an interesting divergence working. The Nasdaq hit a new high after the Fed while the Dow and S&P 500 did not. The Nasdaq made a new high by 82 cents. But as you can see, the SPX is responding to 620 hours of this move off the November low. This is also the 89-90-day window off that November low and it’s on the front end of the seasonal change point. It’s very possible a change has already started. If the stock market does not correct given these important cycle points clustered with the Investors Intelligence report we are really dealing with a runaway train.