Futures pointing down again as global markets sold off over night. In fact Japan had one of its worst days ever in over two decades dropping 9.38%. Europe also had some pretty nasty declines as well.

We've posted a chart for shorting that we believe will provide a good risk/reward for traders. UFI of all things makes 'yarn'. Exciting huh? They are a small-cap company that in the last three days has started to show rapd deterioration. Since August they have more than doubled and while we don't believe in trying to short a stock that is moving like a freight train, the technical  picture over the past few days has dramatically weakened.

By the way, don't be surprised if at some point today you see the Fed jump in with a rate cut. Not sure if the impact will be all that significant at this point. Nonetheless, if it doesn't happen today, you can count on it happening real soon. I'd be shocked if Bernanke waited until the next Fed meeting later this month. 

Update: Speak of the deveil - looks like the Fed gave the markets that rate cut - eat your heart out Cramer!

Update II: Sold short shares of UFI @ 4.34

Update III: Covered the UFI position @ 3.71 

Here's the UFI chart...

It becoming very clear, that no one want their money in this market at all and that buyers are running for the exits in mass. As much problems that has already occurred with all of the failed federal interventions and so forth, the last thing the Fed would want to do is talk down the economy even further. Well, Mr. Bernanke decided to open his mouth once again as he stated the "crisis could prolong the economic pain" - just the thing that people want to hear who are looking for an end to all this mess.

We are primarily sitting in cash right now except for short position in MYGN. Trying to take a position long in this market is futile, and to try calling a bottom is moronic. If you look at the monthly charts below, you'll see that the market is in a free fall, and could possibly test the lows from 2002. What is even crazier is that if you look at a monthly chart of the Dow, we are more oversold then we were during the Tech Bubble of the late 90’s and even more than the 1987 market crash.

In fact you would have to go all the way back to 1981 to find a period in which we were this oversold. So to keep piling on the short positions is somewhat risky at this point. I would wait for some kind of relief rally before initiating new positions. 

Click Here for the Monthly Nasdaq and S&P charts…

Here's a couple of charts for you to take a look at. We are probably in the most oversold conditions that we have been in quite some time. Below is the VIX chart which measures implied volatility. It moves inversely to the market, so that it tends to spike when the market is declining. As you can see, that over the last 10 years this chart is at all-time highs.

A lot of traders will use this as a contrarian indicator and when you are getting readings over 55 it's not a bad time to consider a contrarian trade - which is what we are providing our subscribers with today. Subscribe now and you can join the fun!

Another chart that we often provide our readers with is the S&P Moving Average Chart which also shows lows that haven't been seen in a very long time. As you can see below, with all of the major declines we have seen this year, we are still hitting new lows on this reading.