A wild month for stocks ends on a sour note. Last Monday we saw the NASDAQ drop more than 8% and the Dow fell more than 1000 points. It has been a rough month for longs and volatility has spiked. We are now faced with the weakest month for stocks: September. Today’s session bulls simply could not hold up the market despite the run in energy stocks. Energy led gainers as Crude Oil rose more than 7% today and 29% in three days. You typically see these snap back rallies in bear markets versus bull markets. We are not out of the woods just yet and will likely be a few more weeks before we see a suitable low to rally from.

Last October the S&P 500 fell 9%, but never quite hit the 10% correction level. In addition, it was a 3 week correction taking the market down 9%. This most recent correction happened all within 7 days! Much like the flash crash of 2010 it took 3 retests of the flash crash low. It really would take just one retest for a suitable low for a rally to start from. These charts we have need time to resolve themselves. Sure you have a few stocks out there like ACI, but they are so few and far between. We need to stay patient and let this market work itself out.

While the long side of the market is dubious at best we are getting signals on the short side. The short side tends to be a bit more dangerous as your downside is limitless. However, there is an opportunity to take advantage of a weak market. While it may be short-lived and quick there is no reason to avoid taking advantage of a weak market.

The biggest key is to keep an open mind. We have the jobs report Friday and as always we have the Fed. Now, the Federal Reserve meeting isn’t for another week, but rumors can fly about a new round of QE. I would not be surprised if QE4 is launched if this market craters.

Stay nimble and cut those losses short.