The knee jerk reaction is to think that the selling will not stick as has been the case for nearly two months. But the bulls have their hands full this morning. The market is overbought in the short and intermediate term, sentiment is excessively bullish and a bunch of tech darlings did not meet investors lofty expectations. I believe it is too much for the bulls to handle.
The bulls will argue that strong rallies tend to end on good news, not bad and they would be correct. If it were not for the fact that the market was already set up for a correction than I would side with the bulls. However, as I wrote at the end of the day yesterday the environment was about as good as it gets. If we do get a move lower it could be sharp as the short base has been decimated and I suspect that the crowd is leaning the wrong way.