The bears came out in full force on Wednesday.

The S&P turned negative for the year while the the Dow and the Nasdaq posted their worst percentage drops since July 16.

The sharp moves were all largely due to increased fears that the economy may be skidding toward a double dip recession - a feeling that was triggered by the Fed on Tuesday.

And those fears seemed to be underscored by Cisco after the bell Wednesday as CEO John Chambers talked about 'mixed signals' in both the market and from customers during Cisco’s earnings call.

Adding to the negative tone, new data out of Beijing showed factory output slowed. Investors took the data as confirmation that China is slowing down and will generate less demand for resources in the months ahead.

In the wake of so many bearish developments, only five of the S&P's 500 stocks ended the session higher -- and all 10 major S&P sectors closed down more than 1 percent, led lower by the industrials, and the financials.

However, there was at least one positive development. The S&P closed around 1,088 -- the July 30 intra-day low – and technical analysts say it could be support.

How should you position now?

Instant Insights with the Fast Money traders

I’ve been faked out on the downside a couple times, says Guy Adami but we’re breaking below some critical levels. We broke below the 200-day on the S&P; that's bearish. Now, 1040 is my line in the sand.

Also the Vix broke higher which is also bearish, Adami adds. And the dollar looks like it’s going higher, that tends to be negative for stocks, too.

Action in the Vix is certainly noteworthy, says Jon Najarian. It blew right through 26, which is close to the 50-day moving average of 26.81. If we break above that level it suggests the market goes a lot lower. And any way you slice it, the move in the Vix says there’s a lot of fear in the market.

I think takeaway is that the economy remains weak and investors should expect interest rates will remain low in this country for a long time, says veteran trade Gary Kaminksy. Money manager will need income and I expect they rotate into master limited partnerships or REITs. Both could see a strong bid for that reason.

The one thing the stock market has going for it is the low interest rates, adds Brian Kelly. Those low rates make equities look better.

My instinct in this market is to nibble, adds Whitney Tilson of T2. I’d focus on some of the world’s greatest companies. Quality is on sale right now. Half of my long portfolio is in the bluish of blue chips. That includes Berkshire , Microsoft, Anheuser-Busch InBev, Kraft, and Goldman. If I were to add to only one position I’d look at Microsoft, he says. It’s just crazy cheap at 8 times next year’s earnings.

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AFTER HOURS ACTION: CISCO

Shares of Cisco traded 6% lower in extended trade after the company disappointed investors with revenue that fell slightly short of Street expectations.

Investors had hoped to hear that an improving economy had spurred stronger sales of Cisco’s routers and switches - but that wasn't to be the case. Adding to the negative sentiment, during the earnings call CEO John Chambers commented on  mixed signals in the economy.

By the numbers, the world's largest maker of computer networking equipment posted a fiscal fourth-quarter revenue of $10.84 billion, or 43 cents a share, excluding one-time items, compared with a profit of $8.54 billion, or 31 cents a year ago.

Analysts who follow the firm expected Cisco to earn 42 cents a share on revenue of $10.89 billion, according to a consensus from Thomson Reuters.

What’s the trade?

I’d take advantage of the panic and buy weakness, says Jon Najarian.

It looked like business investment was so strong in the past quarter, says Karen Finerman. Now, I don’t know if Cisco is a value trade or value trap.

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Trader disclosure: On Aug 11, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova owns (AKAM), (BAX), (FCX), (MOS), (PFE), (SU), (XBI); Terranova owns (GLD) Calls; Adami owns (AGU), (BTU),. (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman and Finerman’s Firm owns (BAC); Finerman and Finerman’s Firm owns (JPM); Finerman & Finerman's firm owns (RIMM); Finerman owns (AAPL); Finerman's firm owns (ARM); Finerman’s firm owns (BBY); Finerman's firm owns (LEA); Finerman’s firm owns (KFT); Finerman’s firm owns (TSX); Finerman’s firm owns (GYMB); Finerman’s firm owns (PLCE); Finerman's firm owns (WMT); Finerman's firm owns (DAN); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Jon Najarian owns (AKAM) short calls

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