The Nikkei 225 (^N225) moved up 1.9% in overnight trading as the yen weakened further and Thursday morning trading in the European markets is showing some strength as well. This points to the likelihood that US stocks will try to make further upward progress in today's session. However it would be unwise to become complacent as there are signficant hurdles for the market to cross in coming sessions.

Some commentators Tuesday took the opportunity to celebrate the resilience in the world economy and questioned just how significant last week's selling was, failing to adcknowledge the extent to which the financial and main street economies have become disconnected in recent times. The risks of further financial de-leveraging remain.

Many of Monday's charts reveal inverted hammer candlestick formations as the indices and many individual stocks spiked higher intraday, but closed near to their lows for the day.

The Goldilocks scenario has encouraged fund managers to accept low rewards for speculation in asset classes that have traditionally commanded higher-risk premiums and that complacency has now gone into reverse.

Clive Corcoran writes that the S&P has support at 1360, which also coincides with the 200-day EMA, and below that there is strong support at 1280.

Clive Corcoran writes that he'll be keeping a close eye on the Russell 2000 (^RUT), because he believes this will be the place where a real change in the underlying market dynamics and sentiment will first manifest themselves.

Clive Corcoran's suspicion is that the appetite for risk had become misaligned with the upside potential for hedge funds, with a rush for the exits by many hedge fund managers at the same time.

The chart for the Nasdaq 100 (^NDX) highlights the cross currents in the market. For many weeks, the 1820 level had proven to be formidable resistance for the index and yesterday's trading resistance turned into support as the index bounced off this level almost precisely.

The broker/dealer index (^XBD), which Clive Corcoran likes to monitor as one important gauge to the underlying conditions in the market, took a 1.8% tumble on Friday's session and has now reached an important level coinciding with the 50-day EMA and the trendline through the recent lows.

Clive Corcoran writes that there have been some divergences lately in the indexes that are grounds for concern about a near-term correction.