I'd be very careful here. This has a very similar feel to it to multiple episodes in 2008. We bounce, reverse, draw in some "bottom callers" and then smash them. I should know because I was smashed once or twice in '08 by thinking "hey - darn market is down 12% in a straight shot, gotta rebound here soon". I am going to err on the side of caution and wait until I see the white of Larry Kudlow's eyes.

It seems improbable we could fall further - these banks seem way oversold right?

No, it can get worse. Too many bottom callers out there. Too much hope. Too many people wanting to catch a turn. And the "leaders" of late have yet to be shot. We call these the generals. A downturn usually ends after the generals are shot. Who are the generals? Unlike most periods there is no 'sector' - just a group of individual names. Unfortunately the stocks that populate our portfolio are those names - i.e. the stocks that have held up the best. So when I start to see our stocks take 10%+ hits in a day, then I'll become more bullish and apply this boat load of cash.

Once S&P 820 broke, bulls were done for - simple as that. I was hoping we'd get at least a more than 24 hour bounce so I could short some of the worst individual names but we never got the opportunity so I'm stuck playing with these evil Ultrashorts. (that said, these vehicles work only in this type of environment - but when the markets reverse they will tear your head off)

It is WAY too cute to expect two reversals (last Thur and today) back to back. I think S&P 750 beckons and by the time we get there you will not want to be buying stock - you will hate the market. So will all the current "bottom callers".