Potential bounce, but...

The downside gap from Thursday has continued to follow through, stretching the $SPX to potential exhaustion on the short term time frame as evident by the index being extended through it's lower Bollinger Band.  Further, this breach is under the much watched 50 period moving average, a key psychological barometer for many market participants.

SPX

This potential short term exhaustion is also showing up in the McClellan Oscillator which has a current reading of -270.24.  Periods where this is below -300 have a tendency to be a zone where bounces occur.

T2106

However, the percentage of stocks above their 40 period moving average as shown by Worden's T2108 is at 31.  As indicated by the lower green line on the following chart, the more sustainable and longer duration moves occur when this drops to below 20, but below 30 also has a tendency to be a zone of exhaustion where bottoms form as well.

T2108

Through much of this year the weakness has been short lived and only a few percentage points from peak to trough before the dips were bought.  The years largest correction thus far has been slightly above 5% on the SPX.  So the question I have is will this dip mimic the one in February and April or be more akin to May through June? I suspect the later.  Ideally I'd like to see the T2108 dip below 20 and further market weakness occur before a continued move higher.  A rally from the current levels will most likely be led by fewer participating stocks which increases the challenge of being in the right stock at the right time.  A broader based longer duration move is just simpler to trade.