Tuesday market meltdown...

Wow. Global markets continue their downfall and it will certainly be interesting to see how the US market reacts tomorrow morning. The Dow Futures is showing over 500 points decline right at the open though it is by no means indicative of where the Dow will open tomorrow but you can bet it is going to be much lower than Friday's close. Have we reached the bottom yet? Don't know but if there is a very huge market sell off tomorrow along with massive volume, then I think it is likely that we will be near the bottom or at least will get a short term rally. What concerns me however is that the January options expired this last Friday and it is my guess that investors have a much lower amount of puts in their portfolios now compared to last Friday so a sizeable number of institutional investors or hedge funds will be affected by the overnight decline in the market and may be inclined to close some of their positions fueling the pressure on the sell side. Compounding this problem may be the rise in margin calls on positions purchased using margin accounts in the last two to three weeks. While the the Nasdaq composite index and the Dow Jones have declined about 15% over the said period, many individual stocks have declined much, much more and if investor accounts are being liquidated at market price, this can only cause further weakness in the market. There is speculation that the Fed might cut interest rates prior to the opening tomorrow. Not sure how well this will be received by Wall Street. Needless to say, it is going to be quite volatile tomorrow morning so it'd be wise not to take any new position at least for about 15 to 30 minutes after the open. Don't try to time the market hoping to catch the elusive "bottom." In these times, it's better to be less greedy and on the right side of the market, then to be greedy and be destroyed going the wrong way.