The major market averages sunk again before bouncing. Volume was lower with major averages closing roughly midbar. The NASDAQ Composite closed less than two points on its 50-day moving average. Major averages could undercut their 50-day moving averages by a couple days before finding their floor. Add to this, a number of leading stocks have been hit hard in the last 3 days which is not surprising since major averages have been taken down more than 3%.
The mid-bar close on the part of major averages is a possible resting point before averages either find their footing and move higher as they've done before, or head lower so they can either complete their 5-6% correction then move higher. Of course, a new precedent since January 2013 would be for major averages to correct beyond 5-6% or even form a market top, but this will take time to develop. And keep in mind markets live to surprise, so don't get complacent and assume markets will automatically bounce within a 5-6% correction.
That said, given quantitative easing, the Fed's position of record low interest rates for a prolonged period, the Fed's position of not acting until employment is well under 6.5%, and an anemic economic recovery, odds favor a market that finds it footing given full blown QE. The Fed completes its 2 day meeting this Wednesday, and while it may taper an additional $10 billion a month, it will have to find another way to keep interest rates unusually low as Bernanke said they would.
Apple (AAPL) shares plunged nearly 10% after reporting earnings on disappointing iPhone sales. This is weighing on the NASDAQ futures this morning but S&P 500 futures are flat to up slightly at the time of this writing.