I have done that since 2006. I know exactly what you mean. Went though a lot of short squeeze. You see the bank short squeez that is nothing compare to home builders short squeez.

The good thing is that I have made very very good gains. About 600% already. So I think I know how to handle the ups and downs in the market. But you never know. Hhehehe. I am very careful now.
I am long skf too. I found ske is a best one to hedge the rally in the market. It goes down so fast and furious when market is going up. I always see some when it is above 185 or less. and buy around 110. But I do not have much in this one. I traded DXD often. But my favrite is spy, since more people doing TA on ES. Dow is more manipulated than spx IMO. I will not trust anyone else to do it for me. If you work hard enough you will do as good as them.

I think this round is cause mostly by the hedge fund liquidation. A lot of forced sales to cover the margin calls. As for carry trade, I have not heard anyfund went bk yet. so I can't confirst that is the case. In case of commodities, I am more incline to think that market going down force the commoditiy fund to liqudate. Espeicially the fund have large Gold positions. But Everything is so interrelated, hard to tell which is the cause or whiche is the effect. Yes the bail out is not done. They will have to pump more and more. But this is not Japan. Japan have tremendous amount of savings. And here in US there is none but debt. Let's say they need 1-2 Trillion more. Where will the money come from?
This country is supporse to borrow the money. and with this amount of borrowing. They are actually competeting with the demand from state, city, corps, and individuals. So they will ended up with printing. If they started to print, a whole new sets of problem will emerge. Foreigners holding those huge amount of USD will dump it and thurs create hyper inflation. So this will not ended up like japan.

You heard the phrase "the lost decade"? Japan had "the lost two decades" already. Check their stock chart. In America, we only had the lost decade. So there are more, much more to go.

I am doing the daytrade now. I know a lot of people who is doing this and we have a chat channel using mIRC. If you like to come by, please let me know. I will give you more detail.