Hedge funds are reported just unload their risky assets because they start to interprate that there will be no QE3. High oil price and Earch quake in Japan made the process accelerated.
We only start to see downgrades of major leaders such as IBM and AAPL (both loss big today).
The hedge funds unwinding of their risky positions will take quite a bit time. A serious correction like this will take 2-3 month to resolve itself. Even market index found a footing now, we don't know if our stocks will be targeted by hedge funds to sell (regardless of fundamentals).
Beyond that, investors mood are still in 2010 (overly optimistic about global economy).
Don't under estimate the downside when hedge funds go wild (remember 2008?).
Also remember that most pension funds are still 95% in stocks.
This is first wave we should avoid as I pointed out days ago. Then we can talk about valuation.
There is no rush. This correction will not end soon. Too early to talk about picking a bottom for investors. But hey, traders love it.