At the time of the LTCM-induced financial crisis in 1998 the Volatility Index spent eight consecutive weeks above 40, marking the most prolonged period of fear and loathing since the 1987 Crash. During our recent bout of excessive pessimism the VIX stayed above 40 for six consecutive weeks.

I called for buying at the very beginning of the swoon, which looks a little foolish in hindsight, but I figured the market was going to flush out like it did after the terrorist attacks and then rebound quickly. As Cramer would say, Wrong!

The Volatility Index is a great indicator to watch to get a sense of when the market is "overshooting." You have train yourself to step in at those times and buy, even though it feels wrong. Your timing doesn't need to be perfect to the day or even the week... you're not trying to catch the precise low.

All you want to do is act in the exact opposite way from the people who are panicking around you: calmly and confidently buy 'em.