Outside Day Averted

The SPX briefly dipped below yesterday's lows, but rallied a bit into the close to avoid an outside day. That does not mean that the market is saved. It just means the technical action was not as bearish as it could have been.

I still believe the market may probe lower levels before it embarks on another rally. Bearish sentiment has not really built up that much. The put/call ratio is still at fairly low levels. And energy stocks, which have been market leaders, are under selling pressure. Not to mention that bond yields look like they have broken out to the upside (4.48%).

We are still in the thick of earnings season, so things will likely remain jittery. Take for example GLW, which sold off hard at first reaction, but then rallied back to close at highs for the day. BJS also reacted very negatively to what I thought was a solid quarter. So overreactions are creating buying opportunities, if you're nimble.