Yesterday all the major indexes with the exception of the Dow Jones Industrial Average broke the October lows. The negative connotations of this are more downside to come. This takes us to the 2002 lows which is not what the investor psyche wants right now. The negative data flying around the headlines are coming from every possible direction. Fundamentally investors feel inadequate since it is difficult to determine what cheap really is. What was cheap two weeks ago has gotten cheaper. The dividend yield on the S&P 500 index exceeded the yield on the 10 year treasury bond and that hasn’t happened in over 50 years. Each day there is a new statistic on something that hasn’t happened in…Years.

The next couple of days are going to set the tone for a short term bounce and some relief from the selling or we accelerate to the downside. Either way the challenge remains clarity before any longer term positions can be developed in your portfolio. The short term plays have been available, but the risk has been elevated due to the volatility and negative sentiment. Downside plays have been the most rewarding by far, but the set up for short term rallies have made them tough to hold. This break lower could present some longer term downside plays if we confirm the break lower today.

Below are several charts that show breakouts to the upside. The moves from yesterday are quite dramatic considering some of the ETFs are leveraged. The short ETFs have move out of the trading ranges showing the pressure on the downside of this market. The bond ETFs are showing moves to the upside reflecting the flight to quality from stocks. If you scan through all the ETF charts you will see that rationale investing is no longer in control. Technically each chart shows the acceleration up or down. These charts are to illustrate the risk of this market short term. Watch them to see how they play out. Remember to have disciplined strategy for entry, exit and target! As you can see the faster they rise the faster they fall.

 You can follow along each day with my Chart-of-the-Day on SectorExchange.com.

Jim Farrish, founder and editor of Melbourne, Florida-based SectorExchange.com, writes regularly about sectors and speaks widely about investing and money management.