Some were hoping maybe we'd see a market low today, but it sure didn't work out. We had tremendous losses, and some folks are obviously shaken up by this very poor action.
The bullish scenario for today was that we'd have a big panicky gap down at the open that would wash out the sellers and give us the ultimate low. That worked for a few hours, but the folks who bought the open didn't stick around for long. They took some quick profits, and as the opening levels were eventually breached, the selling pressure continued.
This definitely didn't play out the way the bulls wanted. The problem is that there are still some substantial unresolved issues in the financial sector, the foremost of which is AIG (AIG) . The market has not been able to fully discount the problems because it really has no idea exactly what they are or how bad they are.
Fear or the unknown is a very powerful thing in the stock market, and that is what is driving us. The bailouts and rescues really don't help that much because everyone is concerned that some new problem will pop up tomorrow and another one after that.
Technically, we look destined to take out the July lows, which is probably what we need to do before things can improve. We have to shake out all those bottom callers that were so confident that the worst was over. A little despair and hopelessness is what will ultimate lead to a market bottom.
My advice remains what it has been for a while. Don't anticipate market turns. Respect the fact that we are in an ugly downtrend, and don't be in a rush to risk your precious capital. A better market will give you plenty of time to buy.
We have the Fed interest-rate decision tomorrow, and that is likely to cause some wild volatility. Lots of folks are now looking for a rate cut, and that may bring in some buyers who think that will save us. I don't think it will, but it may give us some bounce.