The huge move lower this morning has largely held intact on the indices, despite some positive divergences in the transports and semiconductors.

On the 30-minute SPY chart below, my light blue arrows indicate how short-term oversold the market had become this morning, printing a hammer candlestick entirely outside the lower Bollinger Band. Keep in mind, this is only on the 30-minute timeframe. Nevertheless, we *should* see a reflexive test of the $142.25 area, or so, as that represents the “middle” Bollinger Band.

Beyond the short-term picture, of course, is the issue of whether the market can absorb these types of body blows and still maintain an overall uptrend since the summer. I suspect we will gain some insight this afternoon, as a close on the lows would negate not only the 30-minute candle but also place a significant amount of pressure on bulls to not allow a weekly close below the 1420′s on the S&P.

On the bright side, technology and the transports are making a valiant intraday effort to stem the tide.

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