On Friday and Monday a large gap-down open provided a convenient setup for aggressive dip buying. It really didn't matter what the news was that was creating the pressure. It was just a good setup for traders that were trying to make a quick buck.
Tuesday morning, emotions have cooled and there isn't a strong move that can be gamed for a strong counter-move. Instead, traders are in wait-and-see mode. They are looking for a news headline of some sort, or a sharp intraday move that will allow for a strong reaction.
In the early going breadth is running close to two to one negative but there are still over 150 stocks hitting new 12-month highs. Unlike Monday, semiconductors are exhibiting some early strength, but it is a mixed bag. Monday there were some good pockets of momentum. Tuesday there isn't much that is moving.
I'm looking for more emphasis on stock-picking rather than index movement as we await the start of earnings season, but it is going to take a bit more time for charts to develop. A few days of flat action is all that is needed to help ease the overbought readings.