Bottom line - A breach of the October low in U.S. benchmark stock indexes would be less likely to extend. In other words, a correction low is likely in place or in sight.
U.S. stocks rebounded after approaching the proposed initial target area (Target Zone (10/26/12)). SP500 had risen +2.21% from its recent low to Friday's high in a potential five-wave advance (Chart 1).
Friday's sell-off appears to be
 retesting the prior "neckline" resistance yet to turn into support (Chart 2, red line), which is bearish.
 retesting the October low which is anticipated.
A resumption of the rebound will likely confirm the end of a six-week pullback.
More importantly, with the breach of the "neckline" in late October having turned out to be a false breakdown and given the corrective wave structure highlighted in Chart 2, any breach of the October low is likely terminal (i.e. less likely to extend).
As a result, our base line assessment is that a correction low is likely in place or in sight.
Target Zone (10/26/12).
In terms of bearish tail risks, top bearish counts are extended corrective decline (double/triple threes), nested 1s/2s or an LD off the orthodox high. While these bearish scenarios are probable, they shall remain alternative counts for now.