The market had its biggest single day decline since the crash of 1987, and it looks like we have lower to go. The Dow closed down nearly –7%, the S&P down nearly –8% and NASDAQ over –9%! To make matters worse, the major indexes closed near their lows of the day, which implies more selling pressure tomorrow. In fact, we could see more downside in the market for some time.

The S&P 500 is now fully outside of a trading channel, and looks like its heading lower.

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The market was expecting news on an agreed bailout Monday morning, but that was rejected by congress in a stunning 228 to 205 vote. There is no Plan B, but it’s unlikely that congress will sit idly by while the market crashes. I would think that some kind of bailout package should be approved soon.

Amateur-Investor.net had an interesting article this weekend, suggesting that we could be entering a period of high volatility like the market experienced from 1998 through 2002. This of course implies a bearish environment for years to come. You can read this article here.

For now, I am not going to take any new trades or even look at possible trades. It’s going to be way too choppy. I will be sitting in cash. Spotting short entries has been difficult in this volatile market, so cash is king.

Trade Ideas for 09/30/08:

None

Good luck and good trading!