After weak action on Thursday and Friday, the market was in precarious position, and the bulls needed to hold technical support of around 1207 on the S&P 500. They failed miserably, and we broke down badly today.

What was particularly worrisome about the action was that when we gapped down to start the day, the dip-buyers hardly even gave it try. Typically, the flippers will try to bounce us when we open weak on a Monday morning, but they didn't have the nerve today. We did bounce later in the day, but there was no big rush to load up into the close.

The market has been struggling with a constant flow of negative news for a while. A week ago, we were going a good job of shrugging it off and were actually climbing a wall of worry, but the failure of the U.S. congressional "super" committee and the constant headlines about issues in Europe just were too much for this market. We simply could not hold up under the barrage of negative news.

So now what? Given the high level of negativity and the fact that folks are underinvested and in need of relative performance and positive seasonality, there is potential for a strong bounce if the bulls can make a stand.