Somewhere along the way, however, traders will capitulate and throw away any and all stocks. I surely recall Black Monday 1987, when the market bounced some of the bluest of Dow 30 blue chips by 30 pct and more over two days.

I expect the same to happen again. Probably within six months, perhaps three.

Here is a chart (comparing the other major indexes to the S&P 500) that shows the Nasdaq Composite index dropping down far lower than the S&P 500, which is a little weaker than the Dow 30 because, like the Nasdaq, the S&P 500 index holds stocks of mostly mid-cap, and slightly higher beta than the Dow 30.

In recent weeks, the Dow Transports index has also followed the Nasdaq index in a market slide. That's a sign that a slowing U.S. economy is starting to work itself into many of these road, air and rail transport companies.

New home sales dropped as low as I indicated would likely be the case when I blogged earlier in the week.

Next to fall apart will be the S&P 500 industrials. I noted today some extreme weakness in the chemicals companies, led by poor earnings at Dow Chemical.

In any event, I have been calling this a Bear market since the week the market peaked following the Fed meeting and monetary policy announcement on May 10.

Equity prices do not all slide straight downhill, and some even rally for a few weeks at a time during the Bear. But the Bear is characterized by lower lows and lower highs, until it reaches a bottom.

Just like traders cannot explain a Bull market peak, they cannot explain the bottom of a Bear. These cycles, however, repeat every 4 to 5 years, and this one is not any different.

The losers are those who bought to hold. In a Bear market, it pays to hold cash, which is what I told you months ago I was positioning myself for.

Pretty soon, I expect to hear Wall Street Talking Heads on CNBC tell us how they all called this market a Bear back in May (NOT!) and how they have been selling stock since early in the year in order to protect the clients' interests (NOT!).

But that's the marketing of the market. The liars are the ones whose lips are moving.

The winners are those who are forthright and working hard to be ready for the next Bull.

Today, Nasdaq was down -16 and the Dow just a couple. The S&P 500 was somewhere in between. Now the focus of traders will be on the S&P 500 to see when it turns bearish.