This decline has been one of the swiftest on record, coming from a period of relative calm and even somewhat positive technical indicators. The selling that has taken place in the last two weeks can only be described as panic selling, for the most part.

$SPX declined sharply below its 20-day moving average, and as such is quite oversold. So far, there is support on $SPX at 1100 to 1120 -- the daily lows of this week.

Equity-only put-call ratios continue to rise. Buy signals will only occur when they roll over and begin to decline.

Market breadth has been very negative, and the breadth oscillators are on sell signals. True, they are deeply oversold, so short-term rallies are possible at any time.

Volatility indices ($VIX and $VXO) have risen sharply lately, but they may have peaked, which would be a positive turn of events.

In summary, expect the market to remain unstable for some time. Volatility will be high, so sellers of premium should be able to benefit, provided that they sell deeply out-of-the-money or provided that there are adequate hedges available.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, and also publishes several option trading newsletters.