At this point you should be out of most, if not all of your long positions. If you've held a stock for a very long time and it is still acting well that is a different story. Probably, most got into the market recently just before or after the follow through day, and just don't need to give back more money then they have to.
What looked like a promising developing rally has turned into a big fake out. As I stated in my friday blog, the combination of a day 2 distribution day and a close below the follow through day's low, is a deadly one two knockout combination for the market. The lesson here for most is, when a market diverges from a precedent, you need to go on the defense quickly. Hesitate, and it could get REALLY ugly.
This looks like it could be the third wave down of the first leg that started 04-26-2010 which generally is preceded by another rally attempt, of several weeks, that sets up a second, multi-wave, leg down. Those rallies can be profitable as the market attempts to rally back to a key moving average.
I'd say to avoid the short side for those not able to monitor their stocks intra-day. The setups that are out there may be good for a few hours or days, but need more time to setup the ugliness of a continued to downtrend. So if you can't trade them, avoid them.
Stay patient and keep your lists fresh. You never know if the market has another diverging idea :o).