The market continued lower on Friday, but was able to attract buyers into sell programs that had the opportunity to send prices sharply lower. Friday was also the best day of last week to subject the market to sharply lower prices.
Monday begins a new week and also Monday brings into light the potentially strongest day of the week. With this in mind and also based upon the 1/2 hour chart, we can expect a very short term rally from here that should retrace about 50% of the decline we have had so far which should bring the S&P 500 just back above the 1400 level. However, from here we would expect the correction in prices to continue to the downside.
Long term traders should remain 45% invested in stocks with the potential to hedge positions further should the need arise.
Short term traders can look to play the counter trend rally with call options. Keep in mind that the counter trend rally should only cover 18 - 20 S&P points so purchase your call options accordingly.