It was a brutal day if you were a falling knife catcher as the market took those impatient bulls who believed the lows were in out and beat them silly with a 6.5% loss on the Nasdaq, a 6.6% loss on the NYSE, and a 6.1% loss on the SP 500. The losses were made even more damaging by the fact that they hit new lows from the recent rally attempt and volume picked up giving the market a very heavy distribution day.

This distribution day adds to the pressure the market is facing as each and every day passes. The market in terms of the Nasdaq and Nasdaq 100 are now down over 51% from the October 2007 highs. These losses have been extremely damaging to the psychology of many market players and has done some major damage to individuals portfolios.

This sad news is made even more sad knowing that the market does not appear to be near a low–at least as far as the market is currently concerned. This is obvious to me via the volume that is coming across the board on the indexes.

The volume is below average to average during this selloff and while that appears good for those expecting the market to turn around quickly, the fact is that low volume selling can last a long time and do some major damage to individual’s portfolios. The low volume can go on for a long time and wear on people which can be much worse than a fast swooning market that hits bottom and turns on capitulatory volume. This turn is obvious to a lot of technicians and causes general excitement to enter the market. The lack of a turn like that prevents any excitement to enter the market and you are left with nothing but pain as the slow drop burns in.

I have produced two videos tonight that go into detail about how the current market looks, how the longs and shorts look, and how the capitulation in one of my wonderful short positions (ARB 65% gain in a little under two full months) is what we need the market to look like before we can call any drop capitulation. Even if we get a selloff around 10% across the board, if volume is just slightly above average, average, or below average, you can be sure that that action will not be called a capitulation day.

The most ignorant of market operators might call it capitulation but those of you wise enough to read this blog and protect yourself from the lies of CNBC know that we will need a massive volume surge like in 1987, or in ARB today for example, before we can even consider the market near a capitulation bottom.

Something tells me that simply is not going to happen because we have a very bad market environment out there. We have multiple banks racing toward zero, GM and F racing toward zero, and a failing airline industry that has every single one of the major airliners priced below $12 a share.