Critical Life Support

For better or worse, we just survived one of the the worst weeks in market history.

For the week, the S&P 500 crashed -18.20%, Dow -18.15%, the Nasdaq -15.30%, and the Russell 2000 -15.65%. And, the damage we saw is of historical proportions:

If the market were a hospital patient, he's now on critical life support, every emergency procedure and surgery has been performed, the last rites have already been read, and the family has been called in. True, miracle recoveries do happen all of the time. In fact, it is our nature to expect them as we should. But, like I've said, we all must face facts and realize that Mr. Market is down and currently in the fight of his life.

No doubt, people will be encouraged to see the intraday reversal attempts after the open and also in the final hour today, especially amid all of the bottom-calling, the market is a "coiled-spring," type chatter. We should continue to expect more of the same. Like the past several weeks, there's hope that something good will happen over the weekend (G7 will do something great, credit markets will magically get better, and happy days will return once again). Hopefully when traders return to work on Monday they won't go back to the same Monday sell mode as we've seen for the past three weeks.

With that said, I also suspect the bears are running a wee bit nervous down here after pulling down the enormous amount of profits they have this week. I've been there and whenever I've made a killing like they have so quickly and so easily over a very short period of time, I'd get nervous as well and take something off the table. That only makes sense. Easy come, as easy goes, so to speak.

While all of us would very much like to return to business as usual, unfortunately there's little reason to believe that will happen anytime soon. The best we can do is manage our risk, stay opportunistic, keep our emotions in control, and keep our eyes open for signs that the worst is really behind us. As long as you do that, you'll be fine no matter what comes our way next.