Breadth and volatility are displaying characteristics that haven't been seen since 2011 or 2008. Therefore, while buy signals can be traded, we are continuing to be cautious.

                                                      chart to watch for clues

Watch Thomson Reuters Equally Weighted Commodities Index for clues.

Thomson Reuters Equally Weighted Commodities Index, will go miles towards telling us if we are headed towards very tough times or if the huge declines of late are actually in a bottoming process.
The index tracks a basket of 17 commodities, including cocoa, coffee, copper, corn, soybeans, cotton, crude oil, gold, heating oil, lean hogs, live cattle, natural gas, platinum, silver, soybean oil, sugar and wheat.

The index has been headed south over the last nine years, reflecting general weakness in commodities. In 2009, a then-29-year-old support level held, indicating that the worst of the financial crisis was priced in.
It’s testing that level again now.If the index holds at 2009 support, it would suggest that lows are in play and the worst has already been priced into the markets. If the index breaks this 40-year support/resistance level, it would suggest that some really tough times are ahead.

"If we analyze a century worth of data, we will see that all crises were followed by major averages bottoming then moving higher which brought major buying opportunities."

In summary, cash or a "core" bearish position should still be held, but these short-term counter-trend buy signals can also be traded.

"A number of funds have a 60/40 stock/bond allocation rule. Since their stocks got hammered, the 60% has shrunk so these funds will have to buy stock to keep up with their 60/40 allocation, so we could see yet another up day in the major averages before the end of the quarter which would further improve the odds for a short-sale position succeeding, though in this time of crisis, some analysts have said this rule may be lifted."

'In 2008 there were two 20% or better bear market rallies before the market bottomed. In between 2000-2003 there were four, and in 1987 there was just one and it marked the bottom. The Dow is currently up 22% of the lows. The first rally off the 1987 crash lows was 27%.'