After three wretched sessions, stocks kicked off the session with a rally Tuesday, but quickly erased their gains. Some traders say the selling may not be over.
It's been a gut-wrenching few weeks for the market, with the S&P 500 now down 7 percent from its highs, and few signs of a turnaround emerging. The S&P sliced through its widely watched 200-day moving average on Monday, and the selling accelerated late in the session, as the CBOE Volatility Index zoomed to a two-year high. Late pain led the index to close just below 1,875, the lowest level since May.
S&P futures are gaining slightly in early trading. As third-quarter earnings season began, Tuesday morning results from JPMorgan, Citigroup and Johnson & Johnson have beaten expectations. Yet traders warn that technical indicators may outweigh good earnings new in the near term.
The selling "may not continue into today—but I don't think it's over," Anthony Grisanti of GRZ Energy wrote to CNBC. "Technicals alone point to a lower market. It looks like we are headed for a 10 percent adjustment."
Notably, the S&P has not suffered a 10 percent correction since summer of 2011. Many have long called such an event overdue.