Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) nose dive more than 50% within these 3 days as the market has been intensely focused on them along with the financial sector. Talks of them being possibly insolvent and plans of placing them in a conservatorship continue to put the market in a tail spin. Placing them in conservatorship would means that stocks of FNM and FRE be worth very little or nothing. It will also put the burden of providing mortgage access and liquidity on to the shoulders of taxpayers, which I believe nobody would ever want that to happen.

With all these pessimism, is the market in panic mode and capitulating? Here's a look at the VIX:
As I'm writing now, the VIX has moved up sharply close to 30. During the last 2 market bottoms in Jan and March this year, we hit a high of 35 before the carnage subsided. While we are still some distance away from 35, the VIX move today point to significant fear in the market. With bellwether stocks reporting earnings and Options expiration next week, it could be a turning point.