Some leading market watchers are predicting a relief rally after the closed at its most oversold level since August 2011.
In the past week alone, the S&P 500 is down 11 percent as investors flock to the sidelines amid concerns over an economic slowdown in China, the world's second largest economy, and other imbalances in emerging markets.
During Tuesday's session, the S&P index settled at 1867.6, trading five standard deviations away from its 50-day moving average, an extreme level that often denotes a buying opportunity.
The idea is that—statistically—asset classes tend to revert to their averages.
Case in point: In a note to clients Tuesday, Goldman Sachs noted that the recent plunge in U.S. equities is reminiscent of the market selloff during the 1998 Asian financial crisis, when the S&P fell 19 percent amid fears of a financial meltdown in Asia and Russia. It later rallied 29 percent in the last four months of the year.