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Reversal today? If so, it could be temporary

Stocks erased their early losses, spurring some traders to talk about the possibility the selloff would be quick, even with geopolitical and other concerns looming.

In premarket trading Thursday, stocks were lower on worries that Saudi Arabia's military move into Yemen was a precursor to a broader Middle East conflict. By the opening bell, stocks were down but off the morning's worst lows set in the futures market. Oil spiked, with WTI futures bouncing over $52 a barrel before trading back around $50.

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"The morning dip was bought but you kind of saw this before the open," said Daniel Greenhaus, chief global strategist at BTIG. The major indexes, lower all morning, were positive in afternoon trading before heading lower in to the close.

But Greenhaus said the market's real near term resolution may not come for several weeks. "Intraday action is always unpredictable but from a longer term perspective ... we think you have to start hearing from companies on what's going on with earnings and the dollar."

The VIX, a measure of volatility, was up 3 percent in afternoon trading. The Dow was down slightly, after erasing a triple digit loss. The Dow Transports were also off lows, but remained weaker.

Thursday's weakness followed a steep downdraft Wednesday, where key indexes were pushed at full speed into the lows of the day. Global markets followed suit, with many registering losses over night. Meanwhile, the S&P 500 was fluctuating several points below Wednesday's closing level of 2061, after reversing losses that took it to 2045.

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Traders said the markets were also watching headlines on Tuesday's crash of a German airliner in the French Alps. Reports that the co-pilot locked the pilot out of the cockpit before crashing the plane raised speculation about terrorism.

Some strategists were skeptical of a quick reversal for stocks, given concerns about the impact of oil and the strong dollar on earnings.

"I don't know if we're oversold enough for that to happen. We're coming off our highs I don't know that there's a big enough catalyst that's going to propel a reversal today," said Andrew Burkly, head of institutional equity portfolio strategy at Oppenheimer Asset Management.

Stocks have been focused on the fact that earnings are expected to decline for the first quarter in what would be the first negative quarter in six years. There are also concerns that the economy is deteriorating just as the Fed looks set to move interest rate highers.

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The iShares Nasdaq Biotechnolgy ETF IBB was slightly lower and was being watched as a harbinger of possible selling. After a nearly 5 percent decline Wednesday, the IBB was briefly higher, after hitting an intraday low of 333, its 50-day moving average.

Paul LaRosa, chief market technician at the Maxim Group, was watching key support levels on major indices to see if the market could get a bounce Thursday. "If they're violated on a closing basis, we'll have additional selling. Today's an important day," he said.

Support for the Dow was at 17,620, and the S&P 500 support level was 2039, he said.

"When markets hit highs, you expect everything to look good, and everything doesn't look good," LaRosa said.

"My feeling is we're still going to be for the next 90 days in a choppy, volatile market," he said. "In my eyes, it's supply and demand related. If you're going to have a major change in the market, a lot of times you have more wild fluctuations near a top or near a bottom."

LaRosa said the recent large triple digit swings in the Dow could be a symptom of that. "If you are topping, we're going to see more wild fluctuations...For now I would think we have a sideways moving, gyrating market trading between 17,000 and 18,500 on the Dow."

Marc Chandler, chief currency strategist at Brown Brothers Harriman, said it would be an important reversal if the S&P were able to rise above its Wednesday close, and close higher Thursday. That could signal another move higher Friday.