Last month in my market update I warned of a pullback in the market based upon the VIX sell signal that had appeared.

The date of that warning was January 12, and the S&P 500 closed that day at 1,136.22.

I also mentioned the fact that it could take a couple of weeks for the selling to appear based upon past history of this signal. If the signal appears today, don't expect the selling to start tomorrow.

That's exactly what happened. The market went higher and topped out at 1,150.23 on January 19, about a week later.

From there it fell to a closing low of 1,056.74 on February 8.

That's a drop of 93.49 points.

If this were the start of long-awaited Primary Wave 3 down (the re-emergence of the dreaded Mega Bear), the most I would expect the rebound to be would be .786 of the decline, or about 73.5 points.

The S&P 500 closed today at 1,104.49. That's a rise of 47.75 points. That's not enough of a rally to declare that the start of Primary Wave 3 down is officially ruled out.

The jury is still out on that point until we clear 1,130.24. Right now, the technical setup certainly appears that we will top 1,130.24 shortly.

Additionally, for this entire run-up since last March, the market has yet to put in a convincing lower low. It's been a constant series of higher highs and higher lows.

The closing low of the prior decline was on October 30, 2009, when the S&P 500 closed at 1,036.19. As previously mentioned, the closing low earlier this month was 1,056.74, which was higher than the low before it.

When you see a lower low, then you can be on the lookout for the potential for Primary Wave 3 down to have started.

For now, the larger uptrend remains intact, and I'm still looking for the target of 1,228.73 for the S&P 500 to be reached in the next month or two.