Broken down

Unless we rally big from here, this market is broken down. Dow, Nasdaq and S&P all made new lower lows today, only Russell 2000 closed above August 6 intra-day low. If the credit crunch is even spreading into the money market fund(Sentinel Management), and Wednesday marks the last day for many hedge fund investors to submit redemption requests for the third quarter, we may head into another down day tomorrow.

1. If we have a follow through on the down side tomorrow, then I see another big leg down in the market. S&P 1370 area is the target I think will be reached soon.
2. Normally, this market should make a low early tomorrow and head to a higher close. But if it doesn't close higher tomorrow, watch out below.
3. The market is oversold yet again, and VIX is so high that you think it marked a bottom, and ISEE is below or around 100 for more than one week, all these are indicators for a major bottom.
4. Yet, today we had a very orderly decline, each small rallies were sold, and we moved lower in an orderly way, there is no panic selling; VIX didn't jump as it used to do during other sell off recently.
5. This tells me something big is coming, very likely a big sell off that tops all previous decline this year, and this panic sell off will likely to mark a short term bottom.
6. If we don't have any panic sell off soon, then we'll likely head much lower, slowly. It's even worse than quick panic sell off.
7. Either way, now is time to sell on any rally, and don't buy on the dips.
8. Now is an expensive time to make money on the long side, you need to wait until the bottom is in.
9. Tomorrow is a key day, and then next Monday, which gets the option expiration out of the way.
10. But at time like this, don't try to play the option "strike price game", it won't matter, this market can go up 100 points and then down 100 points the next hour.
11. I purchased some DIA puts today, hoping the Dow will join the sharp decline in Russell 2000 soon.
12. We'll likely dip below 13000 very soon, maybe tomorrow, how low it will go, I don't know. But I think 12500 is a target if we have some panic selling.
13. Cash is a position to hold now.
14. And if you're nimble enough, buy some puts or ultrashort ETFs.
15. BTW, during 1987 crash, the market had three big down days before The Black Monday-Oct.19th,1987. So even the chance this happens again is remote, you'd better prepare for it. Don't get caught in something like that.