After today's poor NFP numbers, the market experienced its biggest single-day loss of the year. In fact, the S&P 500 ($SPX) closed a mere point above where it did on the first session of the year (1/3). My downside target is ~1259, which is the 61.8% retracement line off the November '11 lows of 1157.
The volatility index (VIX) closed at the high of the year. This implies that fear is returning to the market and that most people were unprepared for today's selloff.
Looking at VXX, which tracks VIX futures and not the VIX itself, one can presume that the uptrend will continue, and that the big boys may be anticipating more panic. Also note the volume profie since the May lows.
The NYSE McClellan Oscillator ($NYMO) is one measure of short-term overbought/oversold market conditions. We are headed sharply lower after recovering from the oversold low two weeks ago. Technically, we aren't oversold yet, which registers at -60, but we are rapidly approaching it. This is one of the reasons for my SPY bull put spread in this post.
Another overbought/oversold indicator is the percent of stocks above their 50-day sma ($NYA50R). Below 20% indicates oversold. At 13%, we're approaching the low from two weeks ago, again adding to the thesis above.