My gut feeling late this afternoon was that the selling turned to panic and fear, which typically leads to a strong bounce. We took the opportunity to add some QQQQ’s for client accounts and flipped some into the close. There is an important Jobs Report in the morning tomorrow and we think bad news is already priced in and could see a further bounce. If a bounce does come tomorrow, while it may be tradable, it will be very hard to trust until the technical damage that has been done, starts to be repaired.

On a day like today, many market participants may be tempted to turn off their computer, avoid the television and simply pretend that the down turn is not happening. Unfortunately, on a day like today we have to muster up the strength to revisit the shopping list and prepare to look for bargains. Our list is quite long, and very attractive; however, we won’t attempt to throw caution to the wind and will await the proper points of entry.

I find myself working overtime on days like today, searching out good earnings winners that have been discarded haphazardly. I also find myself watching recent momentum favorites for a turn, as they will often be the first to bounce. A good example of this is recent Shark Bite Netease.com, Incorporated (NTES), which after selling off sharply for 2 days, bounced from $81.31 to close at $84.23, a $3.00 reversal and good indication of buyers finally showing up with bids.

Oil has been trending lower over the past several days, and I suspect we are do for an over sold bounce. While we intend to play it, we don’t advise calling it the October bottom. Stocks have much work to do before they can be trusted again. Earnings season is coming up soon and that should help stabilize stocks with good earnings.