By Paul Cherney Indicators based on end-of-day data are negative for both the Nasdaq and the S&P 500, but the markets are now ripe for a short-term bounce from oversold conditions (maybe just one day).

The S&P 500 has satisfied expectations for prints in the 878-869 area (outlined in the Jan. 17 column).

The Nasdaq still has not delivered prints in the 1355-1327 area, but Thursday is shaping up as another day which could see a shakeout and a reversal for prices.

A shakeout is a short-term capitulation of sellers. These markets are ripe for one. The S&P 500 might have experienced the majority of a short-term shakeout in Wednesday's session, but there are going to have to be other technical signs that the bears have lost their power (temporarily).

Ideally, I would like to see a sharp drop at the open of trading Thursday (not terribly important after Wednesday's session), and a surge in the VIX (market volatility index) to prints above 33.44, but then, in order to offer some sort of confirmation that there could be an intraday short-squeeze in place, the VIX (ideally) should drop to below 30.49.

These markets are ripe for a short-term rebound in prices. Cherney is chief market analyst for Standard & Poor's