September is historically the market's worst month, and stocks were responding according to form in the opening hours Tuesday. Major averages tumbled from the opening bell following a steep decline in Japan's Nikkei 225 to a 19-year low and a weaker-than-expected factory index.

As of 1:29 p.m. EDT, the

Dow Jones Industrial Average

was down 3% to 8402.30. The

S&P 500

was lower by 3.1% to 887.67, and the

Nasdaq Composite

was off 3.1% to 1273.99.

Benefiting from stocks' woes, the price of the benchmark 10-year Treasury note was up 1 9/32 to 103 8/32, yield falling to 3.98%. Falling in concert with stocks, the U.S. Dollar Index was lately down 1.12 to 105.75 (ouch) while the price of gold was up $1 to $314.90.

Japan's 3.2% fall triggered weakness in global equities, exacerbated in Europe by a weaker-than-expected consumer confidence report in Italy. That combination, in turn, led to weakness in U.S. equity futures in the preopening hours, which was intensified by Prudential Securities' sell recommendation on

Citigroup

(C) - Get Report

, UBS Warburg's downgrade of

Ford

(F) - Get Report

and Lehman Brothers' cautious comments on

Intel

(INTC) - Get Report

.

Then came the 10 a.m. EDT release of the Institute for Supply Management survey for August, which was unchanged at 50.5 vs. expectations for a slight rise to 51.8. The prices-paid component fell to 61.5 from 68.3, calming nascent inflation concerns (although the Bridge/CRB Index has been on the rise of late). More troubling was the stumble in the new orders component to 49.7 from 50.4 in July.

The ISM report was even more disconcerting, given that it followed Friday's

admission of powerlessness by

Federal Reserve

Chairman Alan Greenspan. Speculation about potential Fed rate cuts re-emerged this morning, even though several Fed governors sought to quell such talk in various speeches last week.

Regardless, if Greenspan believes rate hikes would have been insufficient to quell the bubble, why should investors believe rate cuts will prove a panacea for the postbubble blues -- especially because the Fed cut rates 11 times in 2001 to little lasting positive effect on stocks?

Reflecting on the aforementioned, Phil Erlanger of

Erlanger's Squeeze Play

, quipped that while September is "the worst month of the year in terms of seasonality," this morning "feels more like Halloween."

After expressing concern about the S&P's head-and-shoulders pattern on

Aug. 21, as reported here, Erlanger last week recommended that clients invest in the

(RYTPX) - Get Report

Rydex Tempest 500 fund, which is essentially a leveraged bet against the S&P 500.

Erlanger believes a significant buying opportunity will emerge in the coming weeks, which is the consensus opinion among many observers. The question, of course, is, from what levels?

Some contend the time to buy is now. Jack Schannep of The Dow Theory.com and

Schannep's Timing Indicator

today upped the bullish rhetoric reported here on

Aug. 22. "The odds are very strong for a favorable investment atmosphere," Schannep commented over the weekend (i.e., prior to Tuesday's slide). "I realize that the 'dreaded September' is upon us,

but 10,000 on the Dow Jones looks like a 'done deal.'"

The newsletter writer reiterated a belief that capitulation occurred in late July and that the market's subsequent rally from Aug. 5 until late last week confirmed a new bull market was born. Schannep forecast the Dow will revisit the psychologically significant 10,000 level sometime this year "particularly if no terrorism acts occur on

or around the first anniversary of 9/11 and war with Iraq doesn't happen this year," prospects for each being additional strains on sentiment today.

Erlanger took a far more bearish slant, forecasting "the markets will sink to lower lows to achieve the necessary negative sentiment" for an attractive buying opportunity to emerge.

The July lows of 7489.50 for the Dow, 775.68 for the S&P and 1192.42 for the Comp remain a ways away, but Tuesday's early action was certainly helping to restore some of that negative sentiment. Of late, the equity put/call ratio was at 0.88, the CBOE Market Volatility Index was up 16% to 41.85, and the one-day Arms Index was 2.85.

Trading activity was light as a holiday atmosphere prevails. But declining stocks were besting advancers by 3 to 1 in both Big Board and over-the-counter trading. Further evincing the extent of the negativity, all but one of the 30 Dow components were in negative territory as of 1:42 p.m.

One of the few groups on the rise early Tuesday were truckers. But that was mainly because of the perceived benefit for such plays as

Roadway

(ROAD) - Get Report

(which warned last week) and

Yellow

(YELL)

after the bankruptcy filing of rival

Consolidated Freightways

(CFWYE)

; in other words, not exactly a "good news" story.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.