Editor's Note:

Do you remember those action figures from your youth? Buy your hero action figure, now with karate-chop action! Well the new stock market action figure now comes with "whipsaw action". The volatility has been pretty amazing. I don't remember seeing moves this big since November 2008. Except the market is a lot higher now so the numerical moves are even bigger!

The lack of follow through on yesterday's oversold bounce is definitely bearish. The S&P 500 index closed on its lows for the session, which normally does not bode well for the next day's open. Personally I suspect we'll see this index retest its lows from yesterday near the 1100 level. If it can bounce again is the real question.

The market still seems too oversold to launch bearish positions. Although from the big rise in the volatility index today (VIX) there were plenty of investors buying puts. Unless you are a veteran day trader with the scars to prove it I would hesitate to swim in this market. Tomorrow I'd sit on the sidelines to watch the action and let the hedge funds beat each other up instead pummeling you or I with this insane volatility and whipsaw market action.

If you're feeling nimble then I would be very, very tempted to buy the SPY if we see the S&P 500 index decline toward what should be support near 1050. Of you could substitute any of the market ETFs like the DIA or the IWM.

We're not adding any new plays tonight.

- James