Yesterday we saw all three market averages fall hard after six days of selling. In fact the S&P 500 has fallen over 6% from its recent high and managed to close Wednesday right below its 50-day moving average. A few people in fact have been saying the market is about to totally crash, with Nouriel Roubini "warning of a reverse dollar carry trade event that would cause another "financial crisis."

Art Cashin also got on this message on Tuesday telling CNBC that we could see the dollar explode in value in a "scramble to cover their shorts in the dollar," that would lead to "a kind of chain reaction and that could lead to a bit more than a 10 percent pullback."

However, I'm not scared. Remember back in late August Cashin also was saying we could have a Fall crash because of an unspecified international event like a new war or terrorist attack - a statement that was really bizarre - but was just bearish talk to justify selling out of the market.

I'm not worried, because I think the market likely bottomed yesterday. Over the past seven years we've several corrections in this bull market and the bull market of 2003-2007 and several big downdrafts in the bear market of 2007-2009. All of these drops would end in a panic washout in which we saw the VIX spike up 10% in a day, the put/call ratio close above one, and the ratio of sell orders to buy orders on the NYSE and Nasdaq reach the 9:1 level.

After days like that the market would reverse within two trading sessions and go higher. Last year that would lead to big bear market rallies and in the last bull market and this one the market would be on its highs within weeks - sometimes days. The very day the market bottomed earlier this month we saw a panic washout. And the same thing happened in July too.

What is more the market hit two key support levels which have defined the bottom of this bull market - the 50-day moving average and an uptrend support line that has marked the bottom of its profit channel since March. And when you look at sectors such as gold stocks you see the same thing - a sharp pullback to support.
I show you this in this video:

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