"To sum it up"
The market is entering extremely oversold levels and I think we are due for a bounce (Fingers crossed). Don't get me wrong, I am not saying we have hit bottom. However, I would like to be prepared to take advantage of this bounce when it does happen. Few of the the indicators are at some pretty extreme levels such as $VIX and $NYMO, both indicators are showing a higher chance of market rebound. (See chart below)
It is important to see signs of buying near the 1101.75 levels. This is a 38.2% retracement level. (From the lows of 2009 to the peak of 2011.) So it should be an important support level to watch. The last time we tested the 38.2% retracement level and bounced was back in June 2010. Should we knife through that level like butter, I would not be surprise that we might sold off to 1050 levels before a bounce. Anyway, this post is not about taking sides or betting the market WILL BOUNCE for sure. This is more of a preparation of what the market might bring and be able to react to it as quick as possible. Plan your trade and trade your plan. Peace.
SPX 3 years Daily chart
10day 10min chart.