It seldom pays to read too much into one day's action on Wall Street. But yesterday's steep sell-off did telegraph an important clue -- and it's not what the bulls wanted to hear.

As you know, I've taken a cautious view of the rally that lifted off July 16. Last Thursday, I noted to my Profitable Investing subscribers that the stock market hadn't yet given us a day with overwhelming upside volume.

That problem continued even as the indexes worked their way higher through yesterday. Advancing stocks outnumbered decliners on the NYSE for six days in a row, but trading volume in the declining stocks remained higher than normal for a healthy rally.

We saw the result yesterday. The market buckled, led by the usual culprits (financials).

So where do we go from here? Today's session will speak volumes. If stocks can snap back strongly, the rally off the July lows could carry into August. However, a weak, lackluster bounce tomorrow (or, worse, another decline) would signal that the market intends to take out its July lows soon.

Hedgers, I suggest watching the Standard & Poor's 500 index carefully today. If the S&P trades in a tight range between 1247 and 1257 during the day, chances are the market is forming a "shelf" before another leg down. Position yourself accordingly, in double-bear funds or August put options, near the close of the session.

For the rest of us, it's a time to be extra cautious. Whether the slide continues today or resumes from somewhat higher levels, I suspect you'll be able to buy most stocks and mutual funds at lower prices in a few weeks than you would have paid today.

Hang on to your cash as long as possible, and dispense it sparingly. We'll get through this "harrowing of hell" eventually, but we'll need patience. Cash will soothe your nerves in the meantime.