For the past 7-8 years, every meaningful decline in the stock market has been accompanied by a crisis, a headline, a rumor, etc. However, this time around, there is no crisis. There is no war, no news, no geopolitical tensions, no earthquake, no tsunami, no debacle in Washington, no political deadline, nor even a single rumor of a sovereign debt default. No, unless the past week was simply computers doing what the computers tend to do to the market sometimes, we're looking at a decline that appears to be driven by something we haven't seen for a very long time: traders/investors heading to the exits.

To be sure, the current market action represents a clear departure from the crisis/Fed-driven environments that have dominated for years. Suddenly, stocks are not going down because of something that happened or what somebody in a country you've never heard of said. No, stocks appear to actually be "correcting" some of the excesses that built up in the mo-mo space over the past year or so.

But Before You Crawl Underneath the Desk...

However, before you run to the computer to sell everything you've got, we need to recognize that there could (key word) be another reason for the current dance to the downside. In short, there is a chance that the trend-following algos are simply locked onto a "trade" at the present time. IF (note the use of capital letters) this is the case, then we shouldn't be surprised to see the market turn on a dime and move higher in a straight line - ala the move seen from February 4 through March 6.

Remember, stocks remain in a bull market until proven otherwise. And, if investors have learned anything over the past 10 years, it is to BTFD. Thus, unless/until things turn truly ugly for a protracted period of time, one may want to take a breath here and give the bulls a chance over the next week or two.

The chart below (S&P weekly) should illustrate my point. And for the record, at -19 percent, the decline in mid-2011 was the last really meaningful correction we've seen.

S&P 500 Weekly

However, the current decline really isn't a blue-chip affair. So, to be fair, we should probably take a peek at the NASDAQ and some of the areas that are in trouble before we decide to just ignore the bearish action taking place right now.

Below is a weekly chart of the NASDAQ Composite since mid-2009.

NASDAQ Weekly

As can be seen on the chart, the upside move in the NASDAQ had become eye-popping since the November low in 2012. As such, a pullback was certainly to be expected. And so far at least, the move appears to be of similar magnitude as the declines seen in 2012. Therefore, there may not be reason to panic just yet.

Speaking of panic, there does appear to be a fair amount emotional selling in some areas such as Biotech, Internet, and Social Media. Take a look...

SPDR Biotech ETF Weekly

There is little argument that Biotech had "gone parabolic" from the end of 2012 into the February high. In short, this is the very definition of a mo-mo move. And as is oftentimes the case, the move culminated with a "blow-off" to the upside, which is traditionally followed by a severe correction. Check.

The question of the day is if a decline of -27 percent is enough to work off the excess that had been built into prices. The good news is the decline that began at the end of February has since corrected the blow-off phase and has also violated the uptrend line that had been in place for more than a year. From a technical standpoint, we would look to the uptrend line from late 2011 as a logical area of support should the selling continue.

A similar situation can be seen in both the Internet and Social Media sectors. Let's take a look.

First Trust Dow Jones Internet Weekly

There has been lots of talk lately about internet stocks getting bubbly. While it is ludicrous to compare today's situation to what was occurring in 1999-2000, the move up in the internet and social media stocks had clearly gotten out of hand.

As to the question of how low can internet stocks go, the Fibonacci retracement levels for the move that began in summer 2011 on the First Trust DJ Internet ETF (NYSE: FDN) may be helpful. The first retracement level (0.25 percent) at $57.78 was violated this week. So, we must then look to the 0.382 level, which currently resides at just below $51. And if the selling gets really intense, the 50 percent retracement level is at 46.68.

And then there is social media. This is where things may have gotten a little "stupid."

Global X Social Media Index ETF Weekly

Although the weekly chart of the social media ETF (NASDAQ: SOCL) isn't horrific, the moves in some of the names such as Twitter (NASDAQ: TWTR) and Yelp (NASDAQ: YELP) certainly have. Remember, when you play with fire, sometimes you get burned!

Garden Variety or Something Worse?

The question of the day is if the current dance to the downside in the S&P 500 is going to remain a garden variety pullback - meaning a decline of -2.5 to -5.0 percent - or become something more menacing.

Currently, the S&P 500 is down -3.98 percent from the all-time closing high seen on April 2. So, as it stands now, the decline isn't something to write home about. And we find it interesting that if the S&P 500 were to drop -5 percent from its 4/2 high, it would wind up right at the 150-day moving average.

So, if the bears can keep the momentum going this week, the 1790 area may be the first real downside target.

But as we stated in the beginning of this morning's meandering market missive, there is no obvious catalyst to this move other than people trying to get out of the way of the mo-mo train to the downside. As such, this remains a very interesting market and something that we will need to watch VERY closely this week.

Tomorrow we'll look at if it is "time" for a really meaningful decline.

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Turning To This Morning... Tensions in Ukraine are heating up again. Pro-Russian activists now occupy buildings in eastern Ukraine and President Turchynov said he would not allow Russia to repeat the Crimean scenario. Overnight markets were mixed with Asian markets seeing fractional changes while European bourses are red across the board. However, while U.S. futures opened lower on Sunday evening, prices have steadily improved and now point to a higher open on Wall Street. Traders will be looking for earnings from Citi and economic data before the bell.

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

Major Foreign Markets:
- Japan: -0.36%
- Hong Kong: +0.15%
- Shanghai: +0.07%
- London: -0.38%
- Germany: -0.56%
- France: -0.43%
- Italy: -0.90%
- Spain: -1.25%

Crude Oil Futures: -$0.09 to $103.65

Gold: +$3.20 at $1332.20

Dollar: lower against the yen, higher vs. euro and pound

10-Year Bond Yield: Currently trading lower at 2.635%

Stock Futures Ahead of Open in U.S. (relative to fair value):
- S&P 500: +4.96
- Dow Jones Industrial Average: +44
- NASDAQ Composite: +11.15

Thought For The Day...

“And oftentimes excusing of a fault, doth make the fault the worse by the excuse.” --William Shakespeare

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The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of StateoftheMarkets.com and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. One should always consult an investment professional before making any investment.