On Tuesday, stocks got knocked for a loop after Wall Street woke up to the first interest rate hike in China since 2007. The People’s Bank of China, that nation’s central bank, only lifted the cost of capital on one-year loans by a quarter percentage point, but the rate hike was enough to put a damper on stocks in the United States, in China and in many emerging markets.

Stocks rebounded nicely in Wednesday’s trading, with the major averages all moving decidedly higher. So, it appears as though the widespread selling bias present on Tuesday was just a one-day market glitch.

Now, as you can see by the chart below of the S&P 500 Index, stocks continue trading well above both their short-term, 50-day moving averages, as well as their long-term, 200-day moving averages. The chart also clearly shows the huge bullish hike since the end of August.

I think that Tuesday’s sell-off, albeit very brief, shows how the market is really jittery and ultra-sensitive to any hint of bad news that could derail the current uptrend. This certainly happened in Apple shares, as the company reported another stellar earnings quarter, only to be rewarded with a sharp sell-off the next trading day. It seems as though the company’s iPad sales were slightly below the so-called “whisper number,” and that caused the stock to fall.

I guess it’s no surprise that stocks are ready to sell off at any hint of bad news, and considering the tremendous surge we’ve seen over the past eight-plus weeks, I think we should expect to see more reactionary profit taking. So, if you have positions in the market right now that have sizeable unrealized gains, make sure you protect those gains by using stop-loss orders.

If you don’t have any exposure to stocks here, then I recommend waiting for a more substantial pullback in stocks to begin establishing new positions. There’s a lot of overbought risk out there in stocks, and you don’t want to buy into what potentially could be a sharp correction.