In short-term trading, you know what's better than having high accuracy in your "predictions?"

It's having a robust method for evaluating risk, reward, and volatility so that you can place appropriate odds, and bet sizes, on possible outcomes.

I call my method "Scenarios & Probabilities," and it's served me well for over a decade in the stock market.

Right now, the market is fulfilling a few of my early scenarios in the path to a bigger decline.

It all started with this view from two weeks ago that I gave Zacks Ultimate members after Labor Day, and then recapped in a video and article on Sep 9...

September Swoon Targets: Where to Buy the Dip

On 9/14, I told my group this...

Raising cash last week was definitely the right call because this slow-motion roll-over could easily turn into a big gap down one morning.

And that will trap lots of longs who didn't see it coming.

On 9/20, I wrote about "The Gap That Traps"...

So, here we are. The SPX has now broken clean through the first support at 4370.

Also recall that I said "any catalyst will do." The financial headlines are filled with "Evergrande! Evergrande! Chinese real estate contagion!"

But we knew that any catalyst would do.

Bounce or Pounce: Which Comes First?

With a pivotal Fed meeting starting tomorrow, I can confidently say the SPX will most likely test today's low at 4305 -- and probably lower -- before it fills that gap up above 4400.

How sure am I? I'd give 3 to 1 odds.

In other digits, 1 chance in 4 we rally right after the Fed meeting.

So that's a big fat NO to a meaningful bounce any time soon.

Because that would take something extraordinary from that meeting (like a "no-taper, ZIRP-forever" kinda promise).

Plus, to differentiate itself from the 4 prior bounces off the 50-day (in May, June, July, August), this plunge well through it makes this "the gap that traps."

The video that accompanies this article has the chart map that explain where I'm buying the imminent dip(s).

For some aggressive trading ideas, I'll tell you that I am long the ProShares UltraPro Short QQQ ETF (SQQQ Quick QuoteSQQQ - Free Report) now and will flip out of that and into ProShares UltraPro QQQ (TQQQ Quick QuoteTQQQ - Free Report) , the 3X bullish ETF.

My first "pounce" area will be near 4200.

I'm also looking at adding to my The Trade Desk (TTD Quick QuoteTTD - Free Report) position and hoping to scoop some Shopify (SHOP Quick QuoteSHOP - Free Report) under $1,400.

And Advanced Micro Devices (AMD Quick QuoteAMD - Free Report) is also on my shopping list under $100. Maybe some NVDA under $200 as well.

One Set-Up Leads to Another

Any good technical trader will tell you that. As scenarios unfold, probabilities shift. Especially as volatility rises, and ranges expand to exert more stop-loss pressure and panic.

So I'll also be paying close attention to how much selling accelerates, as more over-leveraged and vulnerable hedge funds are discovered in the market correction they didn't count on.

A more important point of view (than pointing at Chinese real estate contagion) comes from Morgan Stanley's resident curmudgeon, Mike Wilson.

Mike Wilson to the Bears' Rescue

As Wilson likes to always point out, "The market and the economy are not the same thing."

And he reminds us of this as the market ran ahead of the recovery and over-shot to the upside. Now with growth flattening, the market will run the other way.

In his interview Monday morning on Bloomberg, he went over his "fire and ice" thesis...

He's calling for a plunge of 20% in US stocks (his worst-case scenario), citing weaker growth and falling consumer confidence.

In the fire outcome of his thesis (his more optimistic view), the Fed tapers to keep the economy from running too hot. This will get us a garden variety 10% correction (think SPX 4050).

The more bearish “ice” scenario is where Wilson leans though as he sees the economy sharply decelerating and downward earnings revisions spike.

The Wilson team wrote in their note published Monday morning...

“Will it be fire or ice? We don’t know, but the ice scenario would be worse for markets and we are leaning in that direction. We think the mid-cycle transition will end with the rolling correction finally hitting the S&P 500.”

I certainly didn't see a growth deceleration coming that would negatively impact earnings estimates.

I just thought we would get a technical washout of 5-7% to scare everybody.

So now I'm reevaluating the growth outlook too.

Which means we don't need to rush and buy the first dip to SPX 4200. We'll be patient and wait until we get more information.

Wilson says smart investors will probably wait until most of the Q3 report cards are in (late Oct/early Nov) to know better.

I expect to know enough in 2-3 weeks, not 6.

Meanwhile, even a "lovey-dovey" Fed result one hour from now won't turn me bullish in the short-term.

Disclosure: I own shares of AMD, TTD, NVDA, and SQQQ for the Zacks TAZR Trader portfolio.