Editor's Note:

The flood of Q3 earnings headlines has begun but the focus was on Europe. Cautious comments from a German official that a comprehensive plan to save the Eurozone by this coming weekend was unlikely helped spark some long overdue profit taking in equity markets. The major U.S. indices gave up -2%.

Overall earnings news was mixed but there were a couple of big headliners. Wells Fargo (WFC) disappointed today. IBM reported after the closing bell and while it beat on the bottom line the top line was weak. Shares of IBM are trading lower after hours and could lead the tech sector lower tomorrow.

The S&P 500 index closed at support near 1200 today. The next level of support is 1180. However, a normal 38.2% Fibonacci retracement of the October bounce would mean a dip back toward the 1170-1165 area. Nimble traders could buy a dip or a bounce in the S&P 500 ETF (symbol: SPY) at these key levels.

No new trades tonight. We do think a buy-the-dip strategy can work but after IBM's news tonight I suspect the dip isn't over yet. Speaking of buying the dip, a dip near $175 or the 50-dma in IBM might be a short-term bullish entry point.

- James