Can say one thing – I’m watching out for volume… I see strong volume during the index drop in DJI and S&P 500 sectors and I consider that Dow Jones Industrials and S&P 500 indexes are heavily oversold. Yet, they are oversold not as strong as in January 2008, however, stronger than in March 2008. The NASDAQ 100 index is quite behind. It slid down without generating the big volume surges. While DOW (30) broke its January and March 2008 lows and S&P 500 came close to the March 2008 low by breaking the January 2008 low, the NASDAQ 100 index is still far above its low levels – no wonder we do not see the panic selling in the hi-tech sector.

What do I expect? – In one of the scenarios I would expect to see is a strong volume surge which would indicate the climax of the panic selling after which the market could strongly reverse its trend. In this case the stock market has to ignore the fact that the NASDAQ 100 stocks are not as oversold as the rest of the market. Another scenario I see is that the NASDAQ 100 may start to push the market down by trying to catch other indexes in the current crush. In the second scenario I would expect to see high volume which would indicate the climax of the panic selling as well.

That is why I am watching volume now...