Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

Yesterday, I stated that I could envision this market range-bound (S&P500 1,175 – 1,225 or so) for the remainder of August. Clearly, with yesterday’s large down day that range can be chucked out the window. So, yes, that was the wrong call. That is, however, exactly why we must reevaluate this market each and every day, as things happen quickly with this volatility.

The question now becomes how soon will we retest or dip below last week’s lows near the 1,100 mark on the S&P 500 before heading higher again. There is a chance that yesterday’s lows near 1,130 may have counted as a higher low, but given that the index closed near the lows yesterday, we should see at least somewhat lower levels.

If we look at a two-year weekly chart of the S&P 500, note that there isn’t a whole lot of support until the 1,040 – 1,060 area (August 2010 lows) marked by the gray box.

Market internals were horrendous yesterday. On the New York Stock Exchange, there were 18 times more decliners than advancers; read: almost no advancers.

Courtesy of yesterday’s 4.46% drop, the daily chart of the S&P 500 now favors a revisit or break of the 1,100 area sooner rather than later. Why? Every potential support there was from late last week’s/early this week’s move up to 1,200 has been broken. While 1,200 presented itself as solid resistance earlier this week, 1,100 seems to have magnetic energy. Again, time frame here is everything, and with today’s options expiration much could happen.

The worst-performing sector yesterday wasn’t what you would think, i.e., it wasn’t the financials. The materials sector performed the worst, while defensives like utilities, consumer staples and health care outperformed.

Most sector charts have been looking similar recently, and earlier this week bumped into resistance areas only to now also stare at lower lows again. The chart of the energy sector as measured by the Energy Select Sector SPDR (NYSE:XLE) is a good example of such.

Beyond that the CBOE Volatility Index (VIX) again spiked closer to last week’s high and, of course, gold and Treasury bonds are getting bid higher. There isn’t a ton more to say other than that risk aversion is big. The major takeaway from yesterday, however, is that volatility continues to mark its presence, and that from a broader market standpoint, a retest or piercing through of last week’s lows now look likely to happen in the near future before we head higher for a more serious bounce.