The massive 200-point swing Monday on the Dow (High:10,590.73; Low: 10,390.92) produced what chartists like to call an "engulfing pattern."

In essence, the high and low of the Dow on one day, surpassed the highs and lows of previous days. Usually a "double engulfing", i.e., encompassing the previous two days, is enough to truncate a trend, either to the upside or the downside, so the triple engulfing should serve as ample warning to the various varieties of Bulls currently overpopulating the trading floors, analyst desks and internet chat rooms.

These Bulls are characterized in several categories, roughly:

PermaBulls - think stocks always go up, regardless of circumstances. Many died in 1929, were reborn in the 1990s, severely wounded in 2000, fattened for slaughter again in 2003.

Raging Bulls - often seen on talk shows pounding tables, these Bulls are a close cousin to the PermaBulls, with the exception that they will sell in order to save their hides, though they will only mention stock sales after the fact.

Bag-holding Bulls - Bullish investors who actually pay attention to the Raging Bulls and are left with less of an investment during corrections, Bear markets and crashes.

Blind Bulls - the bulk of investors in 401Ks and similar investment/retirement plans who have no idea where their money is going.

Dumb Bulls - typified by two types, one that buys at highs, and one who sells at lows.

Really, really Dumb Bulls - investors who "average down" in stocks in which they are already taking losses.

For those of you still confused by the sudden emergence of the Bear (bears typically hibernate during the winter), a word of caution: this particular Bear is only now growling. He will become more agitated and begin clawing and devouring everything in his path in short order.

The Dow Jones Indutrial Average has shown a certain resiliency over the past 18 months that has confounded analysts of all stripes and in recent weeks displayed a trend upwards without any meritorious news behind it. From an intraday low of 7397.31 on March 12, 2003 (beginning of the Iraq War), the Dow has rocketed to a recent high of 10590.73, reached only yesterday.

The Bulls should be mightily satisfied with a 43% gain in just over a year and a half. That kind of performance is outstanding by any measurement. In just the past month, our beloved Dow has added a blistering 1000 points - a significant short-term rise.

The engulfing on Monday is the beginning of a long-overdue correction. Excess is being squeezed out of the markets by the minute.

An Aside to Wal-Mart Shoppers

On news that Wal-Mart performed poorly in comparison to its retail brethren (Sears, KMart, Target, et. al.) due to not discounting during the first weekend of the Christmas shopping season, the advertising executives on the account might want to change the company slogan from "Lowest Prices - Always" to something along the lines of "Lowest Prices - Sometimes, Maybe, Depends..."