Most market weaknesses have fast selling phases and slow selling phases. The fast selling phases are dangerous, but once market settles down in slow selling mode, you will see 100 or around that number 4% downside breakouts a day. In those phases the EP, Virgins and Double Trouble still work, but you have to scale down your profit targets and take quick profits. At this stage it is difficult to tell how the move will progress, but a reflex bounce is high probability.
When a market goes down a lot in a day, all the kind of systems discussed in the James Altucher book , Trade Like A hedge Fund , kick in and that invariably leads to bounces. Even though Niederhoffer has blown up again because of excessive risk taking, what he says in his two books The Education of a Speculators and Practical Speculation is very useful framework to keep in mind and is supported by years of statistics. Panicky moves always resolve to upside and markets have an inherent upward bias.
Most of the time such panics are not directly related to underline fundamentals but linked to some business blowing up, some hedge funds or group of funds blowing up, or systemic issues. Because bulk of market participants follow sound risk management strategies, in such situation the selling feeds on itself as more participants are forced to sell to manage risk. When that phase passes, we have roaring rallies like we witnessed in August/ September. Bearish phases in market tend to be of short duration.