Editor's Note:

The S&P 500 index snapped the six-week losing streak with a gain of less than one point. That is not very convincing and does not inspire any confidence in the oversold bounce. Now that June options expiration is over the market might see a stronger rebound from the 200-dma but the intermediate trend is still down. I don't see any changes from my prior comments which I'm reposting below:

Earlier Comments:
A drop to 1,250 on the S&P 500 would push the correction to -8%. If the S&P 500 breaks down under 1,250 then it's probably headed for 1,200, which would be almost -12%. A drop to 1,200 would also be a 50% retracement of the S&P 500's rally off the lows from last August.

Eventually stocks will see another oversold bounce and it might last more than a day or two but the important thing to note is that the trend is down and traders are likely to sell into strength.

We may want to consider the idea of waiting until the market gets a chance to react to July's Q2 earnings news. That would mean our next entry point may not be until mid to late July.

If we do happen to see a bullish entry point we'll need to trade defensively and keep our position size small to limit our risk. I am not adding any new trades tonight.