Looking Beyond the Wreckage - TheStreet

Looking Beyond the Wreckage

The key tomorrow is what happens in Shanghai.
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This was a day for the history books. Not only was the point-loss breathtaking, with the

DJIA

down more than 500 points for a while, but the breadth and intensity of the selling were at levels last seen during the crash of 1987. We have had plenty of ugly selloffs in recent years, but none that was as broad and intense as this one.

I can go on and on about how ugly the action was today. Breadth was horrid, volume heavy and key technical levels cracked. There was nothing positive to be found no matter how hard you might look. Our task at this point isn't to moan and groan about the ugly action, but to figure out what to do in the days ahead.

If you read the technical analysis textbooks, we now have a clear breakdown and should be doing some selling. You absolutely have to make sure you have some idle cash on hand now that we have cracked support.

Of course, when we sell off this hard this fast, there is also a good chance of a reflex bounce. That can be quite powerful, but it won't change the fact that some pretty substantial damage was done today.

The key to tomorrow is going to be what happens overseas, particularly in Shanghai, China. If Shanghai bounces back a little or even stabilizes after the 10% drubbing it took last night, that should calm things and bring in some brave dip-buyers.

Nonetheless, there are sure to be plenty of trapped longs who are going to hit the eject button if they get some bounces. That overhead is going to make it very tough for the market to quickly rebound, and expecting it to do so is the triumph of hope over reason.

We have tough slogging ahead of us, so rest up. I'll see you in the morning.

James "Rev Shark" De Porre is the founder and CEO of Shark Asset Management, an SEC-registered investment advisory firm. He also operates

sharkinvesting.com, an interactive online community that serves and educates active investors. De Porre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children.Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback;

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