Stocks slid on Thursday as the indexes followed a pattern of the past six trading days, closing on the upside one day and on the downside the next day.

On Thursday, the Dow Jones Industrial Average erased a triple digit loss to close down a smaller 45 points while the S&P 500 declined 6.6 points.  The Nasdaq was lower by 26 points and the Russell 2000 was down 11.5 points.

The S&P 500 Trust Series ETF volume was heavy in the morning selloff but saw light buy volume as the markets recouped some of those losses by the end of the trading day.  In other words, the buy program this afternoon was not convincing and appears to be a head fake.

It appears that the best course for traders is to wait until the markets give a buy signal.  The markets are not there yet, and there appears to be a need for some serious buying before the markets give the all clear signal.

One of the best forward looking signals is the monthly new high/new low index.  It appears to be flashing "stand by" currently.  The best time to buy is when that signal goes from "stand by" to "buy mode."

We are not there. Traders need to stay patient.

Attached is the daily chart of the S&P 500.  The eight-day moving average is clearly trading below its 22-day moving average.  That is never a good sign.  In addition, it appears to show an ominous looking setup. The S&P is oversold on the daily time frame, but caution is warranted.

In sum, traders need to be defensive and only make quick trades and get out until further notice. There are too many global events that are disruptive to financial markets at the current time.

This article is commentary by an independent contributor. At the time of publication, the author the author was long (NUGT).