Who pulled the plug?
Nasty turnaround late in the day. The SPX broke below the key 1225 level, and the selloff basically picked up steam from there. That left a big reversal day for the markets, on higher volume (read: distribution). The Nazz traded over 2 billion shares.
The bearish action likely means that the short-term direction is down. Yes, the trend can change that quickly. I know it's frustrating, but we have to be flexible. I am still looking for the market to rally during the fourth quarter, but it looks like we have to take a trip lower first.
I lowered my long exposure dramatically today, by adding some ETF shorts. I will still be keeping my eye on recent leaders, as they will likely make the strongest moves higher after any brief correction.