A decent bounce is imminent

Two weeks ago I advised about the risk of a hard selloff coming when S&P was flirting around 2780:  Right now the market is quite overbought for the short term and can easily sell off for any news perceived as not so good. I think the downside risk is much more than the upside for its next major move. Honestly I was expecting a much fast correction at that time. But the market god will never make anyone easy in trading and it continued to move in a very tight range for most part of the last two weeks, letting everyone guess which way it would break out. Well, the reckoning day has finally come today with S&P shed as much as 60 points (over 2%) at low and the fear index VIX jumped close to 40% at one point. This was a rather panic selloff not often seen. Recall VIX jumped 50% back in Feb at the start of this overall correction that is still recovering? This is second to that drastic panic, often a good contrarian indicator that it was oversold enough for now justifying for at least a quick bounce back.

One observation that S&P broke down through its 50 DMA at its low intraday but managed to fight back to close just one point above its 50 DMA (1716). Does it mean that it wants to stay above this important trend line? I think it is possible. I'm still looking for a general uptrend for the next few months for the market and if so, it should stay above this level. I think there is a good chance that we may see a decent rebound very soon, if not starting from tomorrow.