Richard Rhodes, professional trader, money manager and editor of The Rhodes Report was one advisor who accurately forecast the recent decline and moved into short positions going into this past week.

And while he sees the potential for a near-term bounce, this week's action leads the advisor to say, "A major trading high has formed, which will lead to a -10% to -20% correction...perhaps deeper."

He explains, "If there was ever a 'bell' to signal the end of an intermediate or long-term rally; we think the decline from the S&P 500 high of 1565 to yesterday's low at 1465 suffices as such."

The constriction of credit and liquidity, he notes, has led to very poor advance/decline figures. As such, he suggests being a seller during any rallies that result fro the "month-end bullish pattern and short-term oversold condition."

Indeed, even in his Long Only Portfolio – a portfolio that as its name implies only holds long position – he now says, "We are going to a very rare, but very prudent 'no position' stance." As for his Long/Short Portfolio, he says, "We are now aggressively short."

Rhodes explains, the world is "shunning risk" – trying to "find the door while it is open." Looking ahead, he cautions, "We fear – greatly we might add – that given the increasing stock volatility – that currency volatility is likely to grow as well. This would further fuel the volatility in stocks, and where it all ends is anyone's guess at this point."

Rhodes continues, "What isn't well understood is how much more of the carry-trade that can and will be taken off; we fear it is a good deal more than anyone anticipates, and we shall likely see some type of enormous blow ups in the hedge fund community. It is only a matter of time."

He concludes, "Therefore, we will mince no words - we believe the highs are in. We think rallies are to be aggressively sold upwards 1500 to 1510, and we think this is part and parcel of the first leg lower of a major decline of between 10% and 20%."

For now, in his trading portfolio he Rhodes is holding several short positions including Dillard's (NYSE: DDS), AutoZone (NYSE: AZO), and Freeport-McMoran (NYSE: FCX).

Each day, Steven Halpern's TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.