Capitulation selling day?

I don't normally send these out during the week but a few folks have been asking me about market crashes or whether this is the correction, etc. Well, it is a correction but we had an interesting day today as seen on the daily chart of the S&P 500 below:

(click on chart for larger image)

We had huge volume on a day where the S&P sold off, bounced off significant support and formed a near perfect reversal candlestick.

At the same time, small cap stocks, which have led this market higher and lower over the past few years, had their second "up" day and that, in the face of a market wide sell off.

These "telltale" signs tell me we've hit at least a short term to intermediate term bottom.  Don't misunderstand, Treasuries are definitely telling us the global economy is sick with deflationary pressures gaining momentum, but at least, for now, we may get a meaningful break from the selling.

I'll have more in my bi weekly commentary next week.

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