It sure looked and felt like the market would finally have a big down day. Things turned around just after lunch when the buyers stepped in. I know there are a lot of people waiting for a dip so that they can get long(er) and apparently the four hour selloff was enough of a dip for some portion of that crowd to put their cash to work. I think a pullback or sideways action would be very healthy right now. I'm thinking that we just go sideways for a while since there are so many people looking for a dip. But I'm not one for predictions. There are some clear channels/ranges on the Nasdaq and S&P that I'll be watching closely for clues about the next move.
http://stockcharts.com/def/servlet/SC.web?c=$ndx,uu[m,a]daclyyay[pc50!d20,2][vc60][iUp14,3,3!Lj[$vxn]]&pref=G
If there's any truism about markets, it has to be that no truth can't be overturned. Still, ratios of price to volatility can sometimes show extremes. The NDX/VXN chart (above) shows 'nosebleed territory' for the NASDAQ. However, looking at stocks above 30 dollars and above the 50 day average, as well as with the 10 SMA > 20 period EMA > 30 period EMA (and the converse), we have a ratio of 989 to 33 (the highest I've seen.
A pullback should create opportunities, but risk stares us in the face right now.