But was the rout in HBOS shares just another day in the global credit crisis or a cathartic climax? A "routine" crisis event, or a capitulation of the type that marks the climax of a market sell-off?

As I view the daily inflow into my e-mail box, I cannot be alone with a sense that some in the fund -management industry are locked in a parallel universe. I continue to receive e-mails warning me that time is running out to invest in an individual savings account. Take advantage of special offers with 0 per cent fees – act now!

Then there is the other 98 per cent of my e-mail box. This is dominated by updates on the tumbling UK stock market and contains some of the most depressing financial commentary I have read in 30 years. Last week was the worst. Everyone now seems convinced that the crisis is going to get worse, that we are heading for further trouble and that shares are to be avoided.

Such unanimity is frequently to be found near the top and bottom of market cycles. As a rough- and-ready guide, the more widespread the conviction that markets are set to go higher, the more cautious one should be. Equally, when taxi drivers start holding forth on the coming financial Armageddon, that should be a signal to brighten up.

No-one knows where the bottom of the cycle will be. But with bank shares such as HBOS and RBS showing falls of close to 60 per cent on their high points last year, either they are close to "funk" territory or we truly are heading for an epochal smash, in which case there will be bigger things to worry about than the forward p/e on Royal Bank of Scotland.

For the moment, most private investors have hunkered down. They do not at all like what they see and are waiting for the storm to pass. Looking at the interbank dealing rates, which had risen to 5.98 per cent late on Thursday, there is no sign of this storm passing any time soon.

But much now critically hangs on what lies behind that unhelpfully Delphic one paragraph announcement from the Bank of England last Thursday on the meeting with clearing bank chiefs, and how the Bank responds in the coming days and weeks. I do not believe it has "run out of ammo" as some suggest. But it is running out of time to fire it. We may have yet to hit the blackest span of the tunnel. But on that enduring investment "clock" – the market cycle of recovery, confidence, euphoria, apprehension, panic and funk – I have a rough idea where the needle now points.

Bank and financial shares have been shot to pieces, with percentage falls far greater than suggested by a FTSE 100 index down 18 per cent from its 2007 high. It has been propped up – till now – by mining and natural resource shares.

But other sectors in addition to banking, such as construction, property, housebuilding, retailing and media have also been badly mauled. Chartists are no more cheerful. They believe that the next leg down for the FTSE 100 will proceed to 5,200, then 4,900 and then 3,900, which would mark a fall of 42 per cent from last summer's high. But many domestic shares are well south of that already.

By contrast, on Wall Street, where investor sentiment has plunged to the same bearish extreme as the 2002 bear-market bottom, chartists say the risk is now to the upside and a bear squeeze may be imminent. Clearly it pays to keep your options open. Life is not always doomed to be spent under an Ichimoku cloud, though it has certainly felt like that in recent months. Wall Street, for all the dramatic events of recent days, may rally out of this current crisis sooner than we will.

Given the market falls we have already seen, we are well over 75 per cent of the way through "normal" recession bear markets. Last week's severe falls were an indication that investors are in "panic' territory" Across the medium and smaller companies sectors, where shares are particularly prone to short-selling raids, valuations are becoming increasingly attractive.

There are rare exceptions to my daily e-mail warnings of catastrophe, so it is worth quoting from one so that we do not lose the will to live. This from Paul Niven, head of Asset Allocation at F&C Investments: "The re-pricing we have already seen leads us towards expecting a moderate rebound in equity markets over coming months.

"From this perspective, we would caution against panic and capitulation as such sentiment is already evident from the majority of market participants, and instead take a degree of comfort that a variety of asset classes are already discounting a bearish outcome, with certain markets (such as equities) arguably already entering into the panic territory usually associated with a rebound in prices.

"Whilst one needs to exercise caution with risky asset weightings due to the cyclical slowdown we expect, there are several factors leading towards us taking a cautiously optimistic position." It's hardly Mr Sunshine. But in today's mood, any light in the dark will do. We should take care not to overlook it.