Pay no attention to the volume generated today, this was a Monday in the summer.
In the short-term, the markets are now registering oversold measures that can precede a bounce.
I still think the markets have the tendency to drift lower to test the supports starting at S&P 500 1206, NASDAQ 2106. BUT with Friday's end of day data, the markets are short-term oversold on several measures and a small rebound in prices is likely. This creates the possibility for some sideways with a positive bias for a few trade days. Obviously, a drop in oil prices would increase the potential for short-term gains.
There still is some vulnerability in the very short-term (like Tuesday) for a one day drop. I do not think that will happen, but if that were to happen, I think it would be just a short-term capitulation that would lead to a rebound or a period of stabilization.
Both the NASDAQ and the S&P 500 have already had closes below price levels that suggest to me weaker prices for a test of supports S&P 500 1206-1183 and NASDAQ 2106-2076, and unless I see a close in the S&P 500 over 1245 or a close in the NASDAQ over 2195, I will expect some sort of a drift lower. The supports mentioned are not that far from current prices.
I would start to become concerned that my expectations for a drift lower are wrong if the S&P 500 managed to produce a close above 1236.24 or the NASDAQ managed a close over 2174.55.
Right now, we are in the summer doldrums when thin volume can see flat trade or volatile trade. At this time I do not think that there can be a big downdraft unless there is a headline of undeniably bearish importance. I do not think that a drop to 1206 or slightly lower for the S&P 500 or 2106 for the NASDAQ constitutes a "big drop."
NASDAQ immediate intraday resistance is a shelf 2139-2143.92, stacked at 2146.49-2157.98 (focus 2151-2158). Then 2165-2185.91, resistance gets thick 2177.85 and higher. Anytime immediate resistances are exceeded, they convert to supports until proven otherwise.
S&P 500 intraday resistance is a shelf 1222.50-1225.08, there is another shelf of resistance 1222.64-1227.61 Resistance is stacked and formidable at 1229-1239.76. A combination of several intraday plateaus creates a focus of resistance at 1238-1242.62, but resistance runs all the way 1245.81. The next focus of resistance above 1245 is 1249.23-1267.
NASDAQ immediate intraday support is 2135.69-2122.86. The next well-defined layer of support is 2106-2039 with a focus of support 2106-2076 (very strong and should hold if tested).