So, the markets had an up day. Big deal! Yeah, you heard me right dear readers....Big deal! There is really no need to get excited over a bounce from oversold conditions. But to give credit where it is due, the bounce did occur from an area of support and was accompanied by good volume. However, the markets face plenty of resistance up ahead, as shown in the chart below. I still feel that shorting any rallies is still the right play here. Though it looks like a nice bounce today on the daily chart, the intraday chart shows that it was still a very tough market to trade.
Another word of caution: If you are long, what you want to see here is a strong bounce from the support level i.e. 1040 levels. You don't want to see the markets consolidate right at the support levels or test the support repeatedly, as that will lead to a weakening and eventually, a break of the support. Remember, the momentum is still very much with the bears here. I see a doji being formed in a lot of stocks I follow, but am certainly not going to play any possible bounce here.
Take care and good luck!