Oversold in and of itself does not mean much, but in the context of a strong uptrend it can be very meaningful. Today the McClellan oscillator closed at -221, which is below the levels seen on Nov 21/07, Mar 10/08, Jul 7/08 Jul 8/09. Bottoms were seen on those days or within a couple of days thereafter. The pattern, on the other hand, is calling for a rally of some sort followed by another decline. As quickly as the market is becoming oversold, it may be that all we see is some sort of double bottom without much lower prices.
The Dow has clear support at 9088, the Jan high, while the SP500 has support at 956. The Qs are approaching support at 37.96.
There are already people calling the top in the rally, which to me is bullish. I don't remember too many tops that have been nailed by the suits on TV or prominent advisors. While we have to keep the possibility in the back of our minds, as long as the March to July trendlines remain intact, there is little reason to believe that we will not see the expected rally into October.