Had posted on Thursday that the markets had entered oversold territory. Also from that post, " the odds favor a bounce here. Oversold can very well become oversold, but then the odds would just favor the bulls even more. Add to that the fact that S&P is right at MA(50), which has been an area of support before." Well, the markets did not go anywhere on Friday and the S&P ended just below MA(50). All that means is that odds still favor a bounce here.
But a fair bit of damage has already been done with this latest "pullback". It is not going to be easy for the bulls to regain 1680 and soon, the MA(20) is going to join it to make it an even tougher resistance level. If Monday is another decent down day, one can expect MA(50) also to act as initial resistance.
Also, the bulls would like to see the markets bounce back quickly here. Major moving averages should act as a springboard, and not as areas of consolidation. And that is exactly what happened in April and June, as marked in the chart below.
In a nutshell, expecting a bounce in the next couple of days. But for the bulls, the real work starts after that bounce.
Take care and good luck!
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