"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Yesterday was very interesting. In short, it looks as if the "Smart Money" is beginning to accumulate stocks again. The "Smart Money" is flies in like a stealth bomber, unannounced, quiet, but you know there around dropping bombs of money here and there.

Keep an eye on IBM which pre-announced and reaffirmed its full-year outlook. GE could be a different story.

Yesterday's wild swings caused the DJIA to go from positive to negative before giving way to a late day sell-off. The volume was impressive as the NYSE traded 2 billion shares, while the NASDAQ traded 3.5 billion.

Redemption's and forced liquidation from hedge funds and mutual funds was evident, which added fuel to yesterday's volatility.

Investor sentiment is extremely negative as;

- The CBOE Volatility Index, the VIX, spiked above 59 and the NASDAQ 100 Volatility index reached 64.

- The Investors Intelligence survey saw the Bulls drop to 25.3% which is the lowest reading since July 1994.

- New highs and lows continue to reach levels not seen since 1990.

As for the pain felt by investors here in the U.S., you need to know your not alone. Below is a list of the returns for some of the major world indices.

World Markets: 1 year returns as of 10-8-08

S.&P. 500 Index: –37.07%
Dow Jones Industrial Average: –34.64%
Nasdaq Composite Index: –37.93%

FTSE 100 Britain: –33.99%
DAX Germany: –37.18%
CAC 40 France: –40.35%
Mibtel Italy: –47.40%
Bel 20 Belgium: –48.35%
FTSE Eurofirst 300 Europe: –40.74%
IBEX 35 Spain: –26.92%
OMX Nordic 40 Scandinavia: –50.00%
AEX Netherlands: –47.39%
Micex Russia: –65.11%
TSX Comp. Canada: –29.49%
Bovespa Brazil: –39.27%
Bolsa Mexico: –34.98%
IPSA 40 Chile: –34.26%
MERVAL Argentina: –39.59%

September is historically the worst month for the stock market, but despite the crashes that have occurred in October, many of the major market reversals have occurred in this month as well. Since October 1st, however, the DJIA declined 15.3%, and the S&P 16.6%.

It looked as if the market was going to put in it's long awaited bottom. If it did or didn't remains to be seen. I think we are real close to a rebound that could recoup at least half of the losses incurred since the August highs. A minor sell-off today followed by a big reversal would confirm this move.

The shorts have returned to the financial sector today. Let them short, and see them cover later. More fuel for a rally.