The S&P 500 rose 30 points from its low on Monday to its high yesterday. An argument could be made that the 30 point rise was the oversold bounce and that the market will now head lower. An upside trade in the S&P 500 does not have as much support as it did earlier in the week.
However, I believe it is too early to get negative. Working off an oversold condition is as much a function of time as it is of price. It has been less than three days since the market started bouncing and is still oversold. I would give the market until early next week to prove itself. If it continues to chop around without making progress a stronger case can be made for it working off its oversold reading by going sideways.
For now I believe the market deserves the benefit of the doubt, especially because it seems that nobody trusts this rally. By the time this move is over everyone should be calling for new highs. That said I am only modestly net long after trimming my exposure into yesterday's ramp.