The overall level of fear in the stock market, especially among the retail investors, is rapidly increasing. Deron Wagner believes this is a good thing however, because it means we are getting all the closer to an inevitable bounce. Furthermore, the faster and harder the market drops, the stronger the bounce will be.

Both the S&P and Dow are now sitting mid-way between their 50% and 61.8% Fibonacci retracements. The Nasdaq Composite closed right at its 50% retracement. Unless the S&P and Dow immediately snap back sharply today, odds are now much greater that both indices will fall to test their 61.8% retracement levels next week.

Deron Wagner takes an updated look at the long-term, monthly charts of the major indices.

Deron Wagner writes that there's really nothing to do until Congress comes back to us with another vote on the $700 billion financial bailout package.

As painful as yesterday's losses may have been for investors and traders who expected bullish follow-through from last Friday's session, the good news is that the selling won't last forever. In fact, the faster and more violently stocks correct, the sooner the inevitable bottom will form, and the greater the initial bounce will be.

It will be interesting to see how the market reacts to the bailout in the coming days, and is probably best viewed from the sidelines for now.

Deron Wagner writes that various commodity ETFs are still forming "bull flag" patterns on their daily charts.

Trade setups with a very high reward/risk ratio typically have a higher chance of stopping out on the initial entry, and may require a re-entry attempt or two in order to catch the potential profit.

With a portfolio that is still presently 80% cash, Deron Wagner is comfortable with the risk of having just this one trade on the table.

Deron Wagner remains fully in cash, observing the recent insanity from the sidelines.