Editor's Note:

We are not adding any new trades tonight.

If you're market bias is bearish then today's failure in the S&P 500 near 1950 and the small cap Russell 2000 index under 1120 looks like a potential entry point for bearish trades.

We also saw a widespread outbreak of bearish engulfing candlestick reversal patterns. Yet these patterns need to see confirmation. A lot of the bearish reversals we witnessed today are in the energy stocks. Yet with crude oil at four-year lows near potential support at $80.00 a barrel it could be dangerous to launch new bearish positions in oil stocks.

If stocks continue lower tomorrow it will cast serious doubt on the rebound from the October lows and might suggest a retest of the low is needed.

Expected more volatility this week. Thursday will see a big number of high-profile earnings reports announced.