Start of another down leg?

1. Today is a good day for me, since I only have short positions and puts positions. Dow lose 2% and Nasdaq 2.2%.
2. The subprime mortgage issues spreads into other sectors. I truly believe it's the start of the next down leg, not the ending of it.
3. But I have March puts on QQQQ and RIMM, which expires this Friday. So I sold these puts and exchanged to CFC and MDY puts that expire in Sept. today. The reason is, mortgage company like CFC has more down side to go, and S&P 400 midcap held relatively well in the first down turn since Feb.27th, so it will have more down side risk than Nasdaq.
4. My next target is Russell 2000 small cap. In a bear market or a sharp correction, I think small cap and midcap will drop more than large cap, since they outperform the large cap recently.
5. Once we have an issue like subprime, time is the only cure and it will get worse before it gets better, so more drops for the market in the next few months.

What's next:

1. If my thesis of more down side for the market is correct, then it's not too late to sell existing positions and go short.
2. Short ETFs are positions to own.
3. RIMM has more down side to go, it held extremely well recently, considering its own trouble and market conditions.
4. PM shares are closing to their bottom, but maybe still under pressure. Now is a market to sell all sectors, people just liquidate all positions and wait. So I won't jump back into PM shares just yet.
5. I like some speculative plays in this environment, like RIMM, BIDU, financial puts. But the overall positions in speculative play should be small in the portfolio.