As I have said before, real reversals after a sizable sell-off usually occur intra-day, and close up big on heavy volume. Could this occur? Sure. Will it is the question for the day.

What could be the catalyst for a reversal?

1) Reduced tensions and a possible solution to the Iranian nuclear situation.
2) News from the Federal Reserve that they may be near the end of its interest rate hikes.
3) News that inflationary pressures have subsided, and that commodity and real estate prices have declined.

Unfortunately, tensions in Iran have not subsided, and frankly, why should they. The Iranians have the backing of the Chinese and Russian's, and if I had those two heavyweights on my side, I wouldn't backdown either.

On the interest rate front, the Fed funds futures are now pricing in over a 70% chance of a 1/4% rate hike in June. In its recent minutes, the FOMC stated that "given the risks to growth and inflation, committee members were uncertain about how much, if any, further tightening would be needed."

After that statement, I can tell you that an uncertain fed, and an uncertain market really don't mix.

I think the month of June will continue to be very volitile, and a reversal for a summer rally will probably get underway after the next fed announcement.