One thing the current selling has not generated is a panicked plunge at the open of trading. There has been no fear-driven "get me out at any price" jam for the exits. The markets don't need to have such an event occur to signal a reversal, but many traders like to see it. We have not had a real gap opening plunge lower which would represent a shakeout, a short-term capitulation of fence-sitting sellers.
On a purely technical basis, a huge drop in prices still does not seem likely due to the substantial support at and just below current prices.
The negative closes on Friday have created oversold conditions based on end-of-day data. I am very sure that the overnight systems run will trigger an oversold, ready to bounce signal for the S&P 500. This is just one measurement of price action; other factors might have been present at previous signals, but based on S&P 500 data back to September, 2002, this signal has fired 6 times, and 5 of those signals correctly predicted that the S&P 500 would close above its open on the following trade day (which would be Monday).
support for the S&P 500 is 1,008-983. I have held that any prints under 998 should attract some bears covering short positions. That happened to a certain extent intraday on Friday, but the failure of the markets to reverse forced me to re-examine intraday prices for more precise levels. I am refining my view of S&P 500 support inside the 1,008-983 to 998-988 and 991-983 so there is a focus of support 991-988. Some sort of a "W" bottom might have to form which means that even if there is a shakeout which leads to a rebound in prices, the lift could run out of momentum and retrace to establish a "W" on the daily charts.
resistance for the S&P 500 is now a thin shelf at 1,000-1,003.31, then 1,014-1,026, with a focus at 1,018-1,023. Once resistance levels are exceeded, even just thin shelves, they must be considered support until they break.
Immediate intraday resistance for the Nasdaq is now 1,807-1,821.57. Additional resistance starts with prints of 1831 and higher, but the well-defined resistance is 1,842-1,871.19, with a focus at 1,845-1,856.12.
More choppy trading is likely, but all of the sideways trading range price action experienced in June, July, and August represents huge support for prices. So far, though, the buyers have not made their presence known in a dominant fashion. Cherney is chief market analyst for Standard & Poor's