One of the market variables that has served me the best in determining the likelihood that moves will either continue in their direction or reverse is the degree of participation in that move. When a market makes new lows, for example--as happened with the S&P today--I look to see how many individual stocks and sectors participated in that move. This indicates whether the move was dominated by a few highly weighted stocks within the index or was part of a broader market weakness.
The picture was mixed today, as we saw 4 stocks making new 52 week highs and 17 new lows for the session. Among smallcaps, it was 0 new highs and 16 new lows and among midcaps it was 1 high and 20 lows. All three of these do not represent an expansion of new lows from last week's worst levels. My Demand/Supply index is 43/50, which also does not indicate broad downside momentum.
Until we see broader downside participation, I am not selling lows here. I'll wait for participation to tip its hand before making that move. Falling tides, like rising ones, should affect all boats.