After declining below some key multi-year lows, markets saw some renewed buying that was driven by a combination of oversold buying and good earnings reports. The question is: does the current mini rally have any legs to sustain any of the gains? I continue to see a volatile market with a bias towards the downside, as evidenced by the extremely weak bearish sentiment.

Yet, in the near term, there could be some buying support based on volatility indices produced by the CBOE. On the technology side, the CBOE NASDAQ Volatility Index (VXN) -- a barometer of near-term market volatility based on NASDAQ 100 index option prices -- is generally viewed as a contrarian indicator. A high VXN indicates maximum fear and a possible market bottom. A low VXN indicates reduced apprehension and a possible market top.

The five-day VXN to July 16 jumped to 31.72 from 29.97 the previous week. The higher reading could indicate a near-term bottom on the NASDAQ.

In the broader market, the CBOE Volatility Index (VIX) is a barometer of near-term market volatility based on the S&P 500 index option prices.

The five-day VIX to July 16 rose to 27.07 from 24.97 the previous week. A rise in the VIX could indicate a near-term bottom in the S&P 500.

The reality is that the technical picture is mixed and indicates a market that may trade sideways with volatility until there is a sense of direction one way or the other.

In this market, you can trade on declines and sell on rallies, as this has been the recent tendency in stocks. The most important thing is to always consider stops and take profits on any rapid price appreciation. The keys are prudence and maintaining risk management to protect your assets.