A steep drop for the Dow to begin the trading week but it could have been worse. The most watched index fell 509 points on heavy volume. The advance/declines were around 6 to 1 negative. The summation index is moving lower. The Dow was off over 800 but a last hour comeback for stocks trimmed that loss. The overall market wasn't as weak as the Dow and that is somewhat of a plus. The NASDAQ was almost in the black today and that may be a sign that things are overdone in the short term. The daily candlestick for the S&P 500 looks like a hammer and that would be bullish. However the measuring objective from the recent bear flag is much lower. Below what I perceive as initial support at 3200. More like around 3100 if the pattern fulfills its objective. I don't think that we'll get a chance to try the SPY puts again soon but I could be wrong. GE got clobbered and lost 1/2 on very heavy volume. The rally fizzled quickly there. Gold fell today too and the futures were off over forty bucks. The US dollar was higher. The XAU shed 6 3/4, while GDX lost 1 1/2. Volume picked up a little to the downside. Gold is trying to hold the $1900 level and whether or not it does will tell us where the gold shares are going. I did place an open order for some GDX October calls but we'll need to see more of a drop to get it filled. GDX is trying to hold support here at 39. The piching Bollinger bands imply a big move and it now could be to the downside. If that's the case, you don't want the calls. Mentally I'm feeling tired. The VIX moved over the 30 level today but then fell back. Some of the short term techncial indicators here remain in the oversold range. So even with the recent volatility things haven't moved up to overbought. That could spell even more trouble down the road. Although I must admit that I haven't been able to read the VIX with any certainty lately. Even with todays late session rally, I still think that we've got more to go on the downside going forward. Option premiums are high since we just rolled into the October cycle. The volatility is adding premium as well. Gold did break the $1900 level today but then came back. That's the line in the sand. The GDX calls could be the next trade but it really needs close attention because there's a chance that things fall apart here for the metals. Perhaps the overall market as well but tomorrow will most likely tell us about that. Asia was lower and Europe had a very negative day. We'll keep an eye on the overnight developments.