Prepare a Plan for Today's Pain

"Pain dies quickly, and lets her weary prisoners go; the fiercest agonies have shortest reign."

-- William Cullen Bryant

The pain and agony in overseas markets continued overnight and the fear of an ugly Monday morning selloff are being realized. A major problem is that the yen has continued to strength against the dollar, and that is causing a broad selloff in the stocks of companies that export products because this essentially reduces their revenue.

Although the yen is the most obvious reason for the selloff, the primary reason is good old fashioned fear. Once the selling kicked in last week many folks found themselves with too much long exposure. They are now panicking and scrambling for the exits. The selling momentum is dominating and dip buyers are standing aside and that means the selling is taking place in a vacuum with no underlying bids. Buyers are now afraid to step up to take advantage of the weakness.

This sort of painful market meltdown is usually short-lived and leads to sharp bounces but it never feels that way when it is taking place. All that investors can think of now is trying to find a way to stop the bleeding. They are acting emotionally because they are feeling intense pain and that often leads to poor decisions. ...