ONE OTHER THING

That is one ugly looking chart but if you look real close, maybe real real close, you will see that the SPY closed today at the same level it closed at last Thursday. So with all the talk about way oversold etc., it has flatlined over the last four days on a closing basis. The swings have been erratic to say the least but it does seem like we have stabilized even though it may not feel like it.

Revshark on realmoney.com offers this prescient observation:

"Although the indices closed only slightly positive, it was a productive day. We came back from a midday dip, and actually managed to close not too far off the highs of the day.

Interestingly, volume was the highest of the year, and there was record trading in the Nasdaq 100 Trust (QQQQ:Nasdaq). That isn't a bad pattern for a decent bounce, because the volume indicates a very high level of emotion among market players.

Breadth was still quite negative, and it is obvious that many market participants are feeling shell-shocked after the damage they have suffered recently. So it is going to take more than just a mildly positive finish to suck in some bargain-hunters.

Keep in mind that the market is close to being at a record-oversold level. What is truly spectacular is how we went from hitting new highs a couple of weeks ago to a big pullback in such a short space of time. I have never seen the number of stocks that are above their 40-day moving averages drop so quickly, and that increases the chance of a reflexive bounce.

It is particularly important that you be very clear about time frames in a market like this. Don't let attempts at catching a quick bounce turn into a long-term investment. Make sure your trades stay trades, and that if they don't work, you exit quickly and take your losses.

The big picture is quite ugly, but that doesn't mean we can't find some trades. Just make sure you stay very patient when it comes to building longer-term positions. There is nothing to indicate that the market is likely to do anything but produce an oversold bounce of limited duration."

My comments on the above are that every trader is no doubt looking to short any "decent" bounce. So I am just wondering how that trade will pan out? Just food for thought.