The SP500 is sitting on its 14SMA. IMO, this is the first line of support. Will it hold? After the strong Sept. move, and potential uncertainty due to the Jobs number on Friday, I don't know. There is no harm in being cautious. (This is not stopping me from buying when I see an opportunity, ie AAPL, but makes me keep a hedge.)
To add credence to the 14SMA support is the 10yr yield. It is near a bottom, and with all the media chatter these past few weeks regarding the low yield (along with today's Goldman note of peaking 10yr), this should be bullish for the market.
That does not mean the market can not go lower, but I think the down side is limited (to 1120is), barring a horrible jobs number Friday.
UPDATE 10/05/10: FDIC's Bair indicated there 'may be' a bit of a bond bubble. This plays up the thesis above. She may cause a sell off in bonds and migration in stocks today.