Even Panics Have Their Uses

The market took its prisoners on Monday and Thursday, and let them out of jail late Thursday afternoon. If you were one of the freed, watch out for those jailhouse doors on Monday. They're likely to clang shut again as it's the last day of the month, usually a bearish day.

But on the first day of February, be ready to bet the house.

Lots of stops were taken out when Standard & Poor's 500 futures broke through yearly lows at 1398 on Thursday. When the contract went from down 5 to down 25 in a matter of minutes, energy drained from the rest of the marketplace; Traders with stock for sale found few buyers; nobody wanted to get caught holding expensive stock in a downturn. Innocent stocks like BroadVision (BVSN Quote), Conexant (CNXT Quote) and Sun Microsystems (SUNW Quote) were suspended in air, with no traction for climbing.

Friday, the market opened down 1%. Bonds were down as much as a full point, and the major bullish underpinning of the market seemed to be eroding. Heart rates and blood pressure rose, hair stood on edge and skin crawled. ...