Jeffrey Saut usually offers a very calm rational opinion at http://www.raymondjames.com/inv_strat.htm. Some quotes from today's weekly missive:

"...selling stampedes typically last 17 – 25 sessions with only 1 – 3 session pauses/corrections before they exhaust themselves. Last Friday was session 21 in the selling skein making this decline long of tooth. Also of note is the Dow’s Dive has left the NYSE McClellan Oscillator more oversold than it has been in years...There were only six occasions in the past 60 years when the Pressure Factor has dropped below -160... None of those instances saw the S&P even 1% lower one week later. Only one instance saw the market negative one month later – last summer which marked the correction bottom. And interestingly – perhaps coincidentally – 5 of the 6 saw the market up over 19% twelve months later. Such oversold extremes typically do not mark the beginningof a bear market...view is reinforced by the Yield Curve, which has been one of the most reliable predictors of recessions. To wit, every recession for the past 50 years has been preceded by an inverted Yield Curve (short-term interest rates above long-term interest rates). Currently, the Yield Curve is very steeply sloped..."

Vector Vest has a "bottom indicator" which has been fairly good during major selloffs (i.e. Japan nuclear crisis, last year's summer correction, etc.) by checking when certain thresholds have been penetrated on the downside for both their Market Timing Indicator and Buy/Sell Ratio. These thresholds were almost reached 2 days ago, and will likely be breached due to today's action. So, this may be bullish.

Hi Matt,

I was under the impression the SPY System would look to buy the oversold dips when the market is in an overall Up trend, and short the overbought rallies when the market is in a Down trend. Is this correct? Given that all of the BPT Intermediate indicators turned down on July 26-27, thus implying a Down trend, I am curious why the SPY System subsequently looked to buy over the next week? Thanks.

While there is the possibility stocks are crashing here, we do not believe that is the case. We believe there is compelling evidence that suggests a bottom is close at hand that will lead to a rally of at least 500 points, possibly much more. First, let's look at some new evidence that arrives out of Tuesday's plunge, that suggests stocks should be significantly higher sometime over the next 4 to 6 weeks. Tuesday's McClellan Oscillator fell to negative -271.25. We went back and researched each time this deep oversold reading was approached since 2008. We found 14 such incidences, and in every case, the Industrials rose 500 to 1,500 points sometime within the subsequent four to six weeks, with one exception, the October 6th, 2008 reading of negative -328.36. The Industrials could only manage a 150 point rally during the subsequent 4 to 6 week period. The road was often rocky in many instances, where prices fell lower initially after similar deep oversold readings, before a significant rally took over. The point is, if history is a teacher, we should see stocks bottoming now, and should be 5 to 10 percent higher within the next month to six weeks, based upon the McClellan Oscillator.

Every Democrat voted NO. Most Republicans voted YES except some "Tea Partiers" voted NO.

McClellan oscillator sure looks near a bottom - very oversold, so any good news from WashDC should produce a nice bounce if/when it happens.

Bove, noted financial sector analyst at Rochdale, just said that he has gone to all cash as "the sky is falling". Of course, this is the same guy who issued a strong Buy recommendation for Lehman days before they went bankrupt, so maybe this is a contrary indicator?