Position sizing and 1929 bear rally/2009 bear rally?

Saw this post comparing a chart of the dow in 1929 and 2009. There are some stark similarities. Whether this play out in 2010 would be very interesting. A retest and a break of the March 2009 low is a possibility.

I've been looking at the implied volatility (IV)levels of December versus January 2010. The IV levels are about 10% higher in January. This may be a signal that January will be more volatile than December. Normally, you would see a higher front month volatility than the back month. The quarterly OXP weeks tend to be more volatile. I have a RUT 620/630 Vertical call spread on, I'm hoping to exit it when RUT goes below 593 (which is near the week's pivot point).

I also saw this post that discusses the very important question of position sizes. The article discusses some important points about the amount of draw-down that is acceptable to you. In other words at what level of loss to your entire portfolio will you get uncomfortable. Something that I've heard from Scott Sheridan (thinkorswim) say was if you're having anxiety or can't sleep because of your open positions, then you're trading too big. You know that your trading size is appropriate when you are not affected emotionally if your open positions turn against you (big assumption is that your have your stop loss levels set). The article also discusses the classic see-saw affect of reward versus risk, which are inversely related. Part of the analysis has to do with your assumptions on the amount of gain and loss for each trade. That will also be a determinant in your position sizing.