First of all, no one knows how long this decline will continue. Trend followers only know a turn after it has occurred. The GMI got me out of the market unscathed. I am now sitting in cash and have retained my profits from the prior up-trend. But, what to do now? 
The GMI is 2 and could fall to one as early as Monday. Even my longer term indicators have weakened, with the GMI-L now at 63. Nevertheless, the longer term up-tend of the QQQQ remains intact. As long as the QQQQ remains above its rising 30 week average (now at 45.59), it remains in a Weinstein Stage 2 up-trend. Note, however, that the SPY and IJR have both closed below their 30 week averages. Hence there is a possibility that the tech stocks, reflected in the QQQQ, will continue to outperform other stocks, or follow the others down.
The Worden T2108 indicator (% of stocks above their 40 day average) is now at 15, definitely in market bottoming territiory. But this is not the time to be a hero. Even the IBD 100 stock lists have been slaughtered. As this table shows, almost none of these momentum growth stocks are within 5% of their 52 week highs and only 2-3% of them hit new highs on Friday. 
At least three quarters of the stocks on the IBD 100 lists over the past year are now below their average price for the past 30 days, somewhat worse than the stocks in the Nasdaq 100 index. Those of us who like to ride growth stocks to new peaks should be completely aware that this is now a low probability strategy.
My goal is not to try to anticipate a market bottom. I buy stocks breaking out to new highs, after they have recovered from a decline. There will be plenty of time to buy (and write calls on) the new leaders after the market has bottomed. In fact, the easiest time to find the new leaders is to check the daily new high list once the dust has settled. The few stocks that come through a decline like this and quickly break out to new highs are the ones I want to own. So I plan to sit in cash and nibble at some shorts while I wait for this market to turn. In spite of what the pundits assert, there is plenty of time to make profits AFTER the market has revealed that it has turned. There is no need to anticipate the reversal; that is usually a futile and costly practice. I will wait for the GMI to climb back above 3 before I test the waters again.
