This appears to be forced deleveraging of assets undoubtedly fueled by margin selling. Every sector is now beginning to get hit. I put this remedial long term SP500 chart up earlier. This is also an unwinding of borrow short, buy long.

Some general thoughts…

• This is the 4th consecutive day that the VIX(VXO) has exceeded 50. In October 1987 the VXO was over 75 for 8 consecutive days, followed by 9 days at over 50 . 17 consecutive days. We are at day 4 and we just broke 60 for the first time late today.

• The TED Spread’s lack of immediate reaction to the global rate cut was telling. Preservation in the face of unknown risk is prevalent.
• At this point any rally will be violent as people try to simply break even at best. Many stocks had broken 5/10 year trends the last few weeks and confirmed them. Others had prior, and others yet, still have not. CSCO, EMC, INTC all sold for a fraction of their then current price to book in the summer of 2002 when the market had bottomed. They still were great companies, but the record revenues were gone, and the economy was in recession. And most importantly for a bear market when it eventually hits bottom… There Is No Reason To Buy The Stock… There isn’t a desperate line of people waiting behind you to resell to at a higher price. That’s as far they can go. Today’s tech high fliers will all go the same route, as impossible as that may still seem. This downtrend won’t end tomorrow or this week, or month, we will have violent counter trend rallies. The major ones this year were ~ 14% from the lows to the next short term high, making it even more difficult was that many of them were hidden among intraday moves as well, that show up as tails on daily candles. That 14% is also comparative to the SP500 decline from 2000-2002, so it serves as decent ball estimate. Every piece of news is going to be psychoanalyzed by people looking for a permanent rebound and there will be plenty of traps for longs who get in early to ‘invest’.
• For long term investors, there is no need to rush. The market is not going to run away. It’s time to be patient. The NASDAQ 2000 peak is a good example of how slow the eventual recovery of lost ground can be. There will be plenty of opportunities for investors when the dust settles.