Just want to share a few thoughts. I have been reviewing past large drops to see if there is a pattern or indicator that foretold flash crashes. I did limited work as described below.
I noticed large drops generally occurred when the MACD goes negative and the 10 day EMA drops below the 20 day EMA and price drops below midpoint of Bollinger bands (4 indicators all at once).
This happened on about August 25, 2008 and pretty much continued with that pattern until Sept 29,2008 when market suffered huge loss.
It happens again around July 28, 2011 just before the huge losses of August 2011.
I looked back at huge drop that happened in 1987, and these signs again occurred on October 10,1987 just a about a week before the massive drops!
Then I looked at 2013. Now this happened in mid-December but the price popped back up and got back above the BB mid- point within a few days. It also happened around June 10, 2013. with the drop starting around 6-17 until it fully bottomed on about June 24, 2013. The drop that occurred in April 2013 was a little different...the 10 day came within a hairs breathe of touching the 20 day EMA but within the month recovered and the days just after were positive prices that went above the BB midpoint. I'm convinced these are very powerful indicators and would like to look at each year going back a ways.
But all the drops eventually recover because we are in a very long term bull market spanning decades so if you stay in long enough you get it back but lose out on what you could have kept and reinvested when it hit bottom! If your close to retirement, massive drops can really mess you up for a few years! So I guess that is why most of us pay attention and are trying to avoid those drops.
So what do these indicators say now?
For the S fund (DWCPF), the MACD has crossed to negative and price is below the midpoint of BB. But the 10 day has NOT dropped below the 20 day. So I would wait a few days to see if it pops back up above the mid point. If it does not I would sell sometime late in the week...maybe wait until Fed reserve meets. Then when bottom looks like it has been reached and price is above the mid point and MACD is positive and the 10 day goes back up above 20 or you are confident using other indicators jump back in.
For the C fund (SPX), all 4 indicators have hit, but again would wait a few days to see if it pops back up and if not get out and watch for the bottom to get back in unless the weekly indicators show a down trend. I'm not seeing that and so still snorts like a Bull although the smell could be better!
I'm not sure anyone could tell with any certainty how much more it will drop or bounce back up. We are due for a correction this year and no one has a crystal ball to tell exactly when it will happen. Bottom line, it's a matter of how much one is willing to risk. Your personal risk tolerance is key! Please do NOT consider any of this as financial advice...just my personal thoughts and what I have observed while staring at these chart.
I viewed free charts at Stockcharts.com to see this. Set parameters to 10 and 20 daily EMA plus Bollinger bands. Stockcharts shows the mid point of BBs, but only two EMA lines. Plus MACD. You can set the time frames.
Here are charts from bigcharts...WEEKLY trend for past 5 years.
DWCPF - S fund tracks it
Dow Jones U.S. Completion Total Stock Market Index, XXWCPF Advanced Chart - (DJW) XXWCPF, Dow Jones U.S. Completion Total Stock Market Index Stock Price - BigCharts.com
SPX - C fund tracks it
S&P 500 Index, SPX Advanced Chart - (SNC) SPX, S&P 500 Index Stock Price - BigCharts.com