No Bottom Yet

This is a little lesson is why buying plunging closes can be dangerous. Going into the last 15 minutes yesterday, I suspect many traders were looking for a bounce this morning. Although I entertained similar thoughts going into the close, I ultimately decided that the probabilities favored more decline, based strictly on the technicals. Here's why.
First of all, I don't know about your trading platform, but mine started to lock up about 13 minutes pre close. This is always a bad sign in the last 20 minutes of the trading when a platform starts acting squirrely because it typically means there are massive MOC trade imbalances that market makers are having trouble resolving. For the last 10 minutes of the day the quotes were essentially locked and the charts blank. If you can't get a reliable quote, you don't want to trade and if you do, you had better use a limit order. Ultimately, I couldn't get a final print until 8 minutes after the market closed. The other issue is simply time related risk management. In the midst of earnings season, with weekend coming up and a global financial meltdown in progress, what are the odds that favor holding positions over that time frame with no exit? Pretty slim.

But equally important as the platform problems was the condition of the VIX, a historic high in the 60s. Although the VIX started going parabolic the last hour, it wasn't at all clear that an exhaustion peak was close at hand and with the 8/16 MAs wide apart going into the close, and I noted on VIX and More that VIX 80 looked like a real possibility.

But perhaps the last nail in the coffin for the bulls was the complete lack of enthusiasm in the NYAD. Although we saw a little pullback in the equities and the VIX, the NYAD remained steadfast in downslope, which I why I place such a high level of confidence in this market tell.

What the downslope NYAD was telling me was that the little green surge in the last 10 minutes was the result of shorts covering, rather than longs buying.