Analogies

The chart below (SPY) is a snapshot of the July- August 2008 bear market rally:

The similarities to today's market action are quite stunning:

Like now, back then we were in the middle of August, in a bear market rally and on the 25th (highlighted by the blue line in the first chart) the market looked decisively headed for lower lows.

This would suggest that a move up from here is possible. The technical picture hasn't changed. This kind of plunges happen at bottoms quite often. Here is a recent example, July the 27th:

Before acting on a trade idea I decide what conditions would invalidate it. This time it is quite easy: the recent lows (1066.5 on ES) should not be breached.

Given the above and since the oversold condition is still valid, I will buy on weakness today but I will only use half of my standard size. I will add the rest on further confirmation.