SPX, -9%!

Worst day since 1987. But doesn't feel as bad as last week's. Probably because it wasn't a new low.

A lack of volume gives indication of less conviction from the Bears. But we're not going to look too much into that.

We've been on the lookout for a Follow Through Day (FTD) to give us a sign that institutions are stepping up to support the long side of this market.

It would come beginning Thursday, with one of the major indexes posting at least a 1.7% move with volume greater than the previous days. FTD's come between four and 11 days of a potential low.

And if we don't get it, we'll assume that down is the path of least resistance.

Looking for a Follow Through Day

After Monday's massive move (the biggest on record for the SPX), we close Tuesday with a small loss.

Key now is volume. It's a problem for Bulls that Monday's move wasn't on heavy volume, and even more of a concern that Tuesday was a distribution day (where heavy selling indicates institutions aren't supporting this market.)

As intermediate-term traders we are now looking for a Follow Through Day (FTD), where beginning Thursday a move of at least 1.7% on one of the major indexes is accompanied by accumulation (buying volume greater than the previous day's.)

An FTD will give us a clue that institutions are supporting the long side of this market. Perhaps setting up for a fall rally.

If not, we focus on finding the best short candidates.

SPX, -7%!

Where the herd is

Magazine Covers. As traders we know how often they mark the ends of trends. Growth companies that reach the front page of Forbes and Fortune usually hit a peak. Everyone that's going to buy has bought. And the path of least resistance becomes down. Of course these indicators aren't as exact as mechanical watches, but they can tell a lot about where the herd is. Big question is: When will all the selling be put in?

To catch a bid

The market can't catch a bid.

Heavy selling across the board has been indiscriminate, which kills our outlook for Growth Stock buys.

We've been fortunate to have been maintaining a cash bias.

While the market has teased us with short-lived rallies, its never sustained itself long enough to set up decent buys.

Likewise, going short has come at a cost for most.

The government's tendency to announce new rules or bailouts just when things look their worst has led to viscous short covering rallies.

The bottom line is it's been a gambler's market for those playing the intermediate-term.

Doing nothing in the markets is as much a postition as going long or short.

Most people have been getting knocked around. But we've been patient and will pounce whenever a decent opportunity presents itself.