Corrections can be unsettling—some more than others. The selling rout on July 31 that single-handedly erased the DJIA’s 2014 gains joins the ranks of other sudden impact retreats that have characterized this market cycle since 2009. They each share two important traits: the declines substantially shook investor complacency, as depicted by steep gains in the CBOE Volatility Index (VIX), often dubbed the "fear index." and they have occurred within cyclical patterns of about seven- to 10-week intervals. Since March 2009, the outcome of these abrupt selloffs has been fortification of support at incrementally higher levels that ultimately produced springboards for advances. Despite the regularity of these corrections, each new selloff must be scrutinized for technical variations that could indicate a possible shift in investor sentiment.

It has been little more than a week since the stock market careened lower amid heightened tensions in two geopolitical hotspots—Russia and Israel. But, preliminarily technical indications leave me cautiously constructive that the worst of the near-term downside for stocks is behind us. In fact, the characteristics I am observing share some common ground with two other significant retreats within the last year—this past February and in October 2013. In both corrections, the DJIA breached trading support and quickly declined to its 200-day moving average, which provided durable technical support. These steep and abrupt selloffs drove investor fear to near-panic levels, but the selling soon abated and attracted renewed buying. It is my contention that the most recent retreat, which has remained relatively moderate in percentage terms (about 4 percent), will likely spawn bargain hunting and the resumption of a decidedly bullish underlying bias.

The July 31 selloff did not arrive entirely unannounced. Some market pros has been warning that a serious decline was overdue and could amount to a 10 percent or greater retreat. When the decline began in earnest, these foreboding forecasts may have contributed to some of the selling momentum, as investors feared that the much-advertised major decline was finally unfolding. I was struck, in particular, by the hair-trigger selling that occurred when stocks breached widely followed technical support levels. These selling actions reflected, in part, irrational and panic-driven decisions. Reckless selling can be a potent precursor of a market bottom.

Scrutinizing the VIX’s behavior in the wake of the DJIA’s recent 300-point daily drop also yields a common thread with the February and October corrections. The VIX quickly rallied to a multi-month peak, but failed to break out decisively above that area amid subsequent market selloffs driven by headline risk. On August 1, the VIX touched an intraday high of 17.57. Then, on August 6, the VIX reached 17.30 intraday. On August 7, with the market pulling back, the VIX only managed an intraday reading of 17.25. These were subtle and preliminary indications that fear was subsiding and that the market was discounting the latest geopolitical events. In the August 8 session, the DJIA rallied from its 200-day moving average as the VIX broke below 16. This technical choreography is in step with other significant corrections that have occurred since March 2009.

Most importantly, I find little technical evidence that the latest correction has derailed the market’s broad leadership. Numerous stocks did violate shorter-term trend lines, but on-balance volume readings in many cases did not align with the deteriorating price movements. Therefore, there was not the substantive confirmation of accelerating downward momentum I would expect if the market were in the throes of a major decline. In fact, the accumulation characteristics in the August 8 broad rebound provided encouraging hints that the rally may have served to define support at the DJIA’s 200-day moving average near 16,350. Still, there is no refuting the many instances of short-term technical trend violations. The repair could require weeks to satisfactorily establish support before the market can resume its basic uptrend. For the DJIA, significant short-term resistance could come into play in the 16,800 area. For this reason, and as a general rule, it might be prudent to avoid chasing rallies that approach this technical level near term. I am maintaining my year-end DJIA target of 18,000. So far, indications are encouraging that this correction is another of those pauses that refresh and reinforce the longer-term bull market.

Gene Peroni Jr. is a senior vice president and portfolio manager at AAM. His daily podcast and monthly Peroni Report offer technical perspective on the equity markets. He is a regular guest on CNBC and Nightly Business Report and has provided commentary on MarketWatch Radio and CBC RadioNetwork.