The stock market doesn't really seem to be caring too much about what's going on in the credit market, which to me makes sense. Stock investors think in terms of the price of their shares going down. The folks in the money market are worried about default - not getting their money back at all. That's why they've all been ploughing in to Bills.
The 1st week of Sept. will be the real test. Several large tranches of paper need to be rolled and if this no bid situation persists they will have to self fund. Many of them won't be able to and it could start a cascade od defaults. If we get through the 1st week of Sept without too many hicups crash is highly unlikely (and highly unlikely otherwise as beyond that potential catalyst I don't see anything that could precipitate such extreme market action). I am long a small position (relative to what I have been doing recently) in the EEM and YM and bought some QQQQ puts yesterday as a hedge. http://www.bloomberg.com/apps/news?pid=20601109&sid=a0eWRcMYfbqg&refer=home