Just read about anything and anyone who was bullish is now in panic mode. Even Cramer is looking for another DOW down 1000 point days. This will be interesting to see how it plays out. Or how fast it plays out.
The 90's changed the typical length of intermediate bull and bear markets. Are we potentially seeing the same thing starting with February? Obviously this isn't a call to blindly buy, but something to keep an eye out for, just in case it is.
Everyone is trying to do the smart thing, run for the exit as soon as trouble brews, but as we know, that's impossible for all of us to be that smart. The market can't work that way, that would mean we are in an efficient market that is always priced exactly right. So something is not right here. Either there is more retail participation then we know of or the smart money is really wrong. I doubt the latter is it, but we've seen some strange things in the last year.
Also, keep in mind that there is no uptick rule anymore. If I were still a day trader, I would have spent Friday relentlessly selling into the sell off to make a stock or two look really really bad. Day traders made alot of money in the early part of this decade doing the same thing with bullets which the SEC banned in 2004. But now without the uptick rule, as long as the shares can be borrowed, you can relentlessly sell on every down tick and keep pressure on a stock (basically bullets without the cost). Combine that with futures and ETF (which just another derivative product I've argued is going to screw the market at some point) selling and you have the perfect recipe for a CRASH (if not now, eventually).
Don't forget, you've got the perfect opportunity to analyze your past trades and learn from them. So you're a better investor in the next rally.
For now, stay in cash, and wait for the right opportunity.