Just to keep you on your toes, the stern Professor Market challenges the students of the great game by springing an acid test on them.

And, as acid tests go, this recent test was a real beauty.

To keep the rotten, spoiled brats in Stock Market 101 class honest, the stern Professor Market, aided and abetted by scary oil-share charts resembling Mount Everest, overzealous headline writers asking if the party is over, Chicken Little commentators who think the sky is falling down and those evil hedge funds, sent the energy-weighted S&P/TSX composite index into teeth-rattling three-day crash mode.

When the dust settled, the TSX was looking fitter and healthier, courtesy of a 519-point, 4.7-per-cent loss.

Martin Ferguson

The Professor has a knack for timing these things just right. The sly fellow waited for the calendar to turn to October to give the nervous wrecks something else to think about. October, of course, is the official stock market crash month (the first great stock market crash was in October 1929, and the last one in October 1987).

The test results were anything but pretty. That is to say, they were as predictable as ever. When those students who hadn't been paying attention to the Professor's lessons heard the pounding hoofbeats of the stock market herd, they did as they always do. They joined the herd.

Last seen, they were heading in the direction of Head-Smashed-In Buffalo Jump, frantically dumping shares at the bottom of the selloff.

If you were one of the students who resisted the pressure to participate in this bout of panic selling, take a bow. It's no small task keeping your head and staying the course when all about you are losing theirs.

If the depth and volume of the TSX selloff wasn't enough to spook you, then perhaps the shell-shocked countenance of veteran money manager Ira Gluskin of Gluskin Sheff and Associates was during his interview on ROB-TV after the third day of the selloff. Gluskin, whose firm is heavily weighted in energy stocks, looked like a man who'd just seen a ghost.

Oil and gas analyst Josef Schachter recently forecast a correction in the oil price and shares of oil and gas companies in an interview with the Edge, but the president of Schachter Asset Management wasn't alone. With the energy sector looking breathless, even an amateur chart reader should have foreseen it.

The oilsands plays took the biggest hits in the energy sector but that's not surprising, considering that they've been leading the charge with stunning returns this year driven by speculation. Oilsands stocks are also more susceptible to dips in the price of crude due to the high production and capital costs for oilsands relative to conventional oil field production.

The panic selling started with the red-hot senior companies such as EnCana (ECA) and Canadian Natural Resources (CNQ), but soon gripped the junior sector and some of its overheated oilsands plays.

As an example, UTS Energy (UTS), a partner in the Fort Hills Oil Sands project with PetroCanada and Teck Cominco, has been the poster stock for the stampede into oilsands plays and, for a spell, even replaced Nortel as the highest-volume stock on the TSX. It's the hottest stock in Canada this year, having returned, prior to the three-day selloff, 753 per cent year to date. Considering that, it was hardly shocking that it would take an 18-per-cent haircut in the three-day selloff.

And, if you were among the stragglers joining the herd late as UTS plunged to $4.55 on the third day, you failed Professor Market, who showed you the following day that the sky over the Alberta oilsands wasn't actually falling. Shares of UTS snapped back by 10 per cent promptly the day after the three-day swoon.

As the stern Professor Market has reiterated time and time again, those who enter this game without a plan and the discipline to follow it usually wind up getting fleeced.

If you were in the camp that believes this energy bull market has a long way to run yet, had a plan to ride out the storms along the way and stuck to it, you get a gold star.

Of course, one should also be wary that a correction or consolidation isn't necessarily over after the first wave of selling. To protect yourself against a deep correction, most experts advise that you give yourself some peace of mind and protect your investment by placing stop-loss orders below key support levels. A support level is basically a stock's technical floor price that, if breached, may signal that a stock has reversed its trend and is destined to drop a lot further.

The day after the three-day carnage on the TSX, sponsored by an energy sector that took a 13-per-cent pounding, Jim Dines, a grizzled and sagacious graduate of Professor Market's class, provided some words of wisdom in The Dines Letter about the gathering storm in the energy sector.

Dines, who had warned subscribers of a consolidation in the energy sector a week before the sector went into the tank, is currently recommending his subscribers play the energy sector through a basket of uranium stocks that, as an energy play, generally trade in lockstep with oil and gas stocks.

"Consolidations are annoying, as their very function is to trick you into selling before the next big upwave," writes Dines (www.dinesletter.com). "Some (subscribers) try to sidestep them by trading the uraniums, hoping to sell out near the top of the consolidation and repurchasing near its low. While OK for professionals, we are against the average investor fooling around with that type of trickery because the bull market is sitting there, waiting for you, licking its chops, daring you to outguess it on a very short-term basis; the odds are you will be tricked out of the uraniums and miss out on the big 'killings' that have begun to be built up."

And, as one UTS chatboard pundit put it as the herd headed for the cliff: "Relax, people. If it's making you nervous, then shut off your computer and come back three to five years from now."

* TIMID TOUT: Technical analyst Don Vialoux recently touted Nortel Networks (NT) as one of his top picks as a guest on ROB-TV's Market Call but, strangely enough, he indicated he wouldn't buy the stock himself.

When host Jim O'Connell asked him if he owned Nortel shares, Vialoux, of the technical analysis site Tech Talk (www.dvtechtalk.com), said Nortel was "a little too volatile for my liking."

If you happen to call Vialoux the next time he's on the Market Call program, ask him if he'd dine in a restaurant whose chef doesn't eat his own cooking.

* GOOGLE BASHING: Yahoo Inc. chief executive Terry Semel came out looking like a yahoo with an ill-timed lambasting of competitor Google Inc. as a glorified portal without a solid game plan.

While Semel said at a web conference in San Francisco that Google "doesn't seem to have a real plan," the world's No. 1 search engine has let its market cap and stunning traffic numbers of 82 million people per month speak for itself.

Google (Nasdaq:GOOG) shares have soared more than 120 per cent year to date while Yahoo stock is flat. Furthermore, Yahoo's market cap of $48.1 billion US now pales alongside Google's market cap of $87.4 billion US.

Those are numbers that Semel could easily have searched himself - if he'd only gone to Google.

* SAGE WORDS: "As the old saying goes, 'don't fight the Fed.' (U.S. Federal Reserve chairman Alan Greenspan has warned of frothiness in the real estate sector). Real estate speculators have no bloody clue what this saying means. None whatsoever."

- Canaccord Capital, in a recent morning note.

Hot Stock

Standard Uranium

TSXV:URN $1.20

Up 25 cents (+26.3 per cent) on 431,300 shares (based on weekly stats through Oct. 14 for Canadian stocks over $1)

Even a teeth-rattling correction in the energy sector hasn't been able to put a damper on some of those pesky uranium juniors that seem to be cropping up almost on a daily basis. Standard spun a new twist on the uranium story by showing it means business with the announcement of a joint venture plan with a private company in Texas of all places and, if all goes well, the Vancouver company could be in production in southern Texas within a couple of years.

Cold Stock

Grande Cache Coal

TSX:GCE $4.50 Down $1.34 (-22.9 per cent) on 1.47 million shares (based on weekly stats through Oct. 14 for Canadian stocks over $1)

A year ago, Grande Cache was one of Canada's market darlings as investors piled into coal stocks. Well, Grande Cache's lease on the TSX's penthouse suite has been revoked as shareholders have taken their lumps amid a cooling market for metallurgical coal and operation problems, including transportation issues. Shares in the Calgary company are floundering at a 52-week low and down 70 per cent year to date.

(Gyle Konotopetz can be reached at gyle@businessedge.ca)