This is both extremely oversold and huge negative breadth momentum. Since the MCO is calculated like a MACD, it behaves somewhat the same and what we should see is a declining bottoms pattern in the indexes with a rising bottoms pattern in the MCO. This would create the classical positive divergence. So far for the last YEAR this has failed at every low to produce a divergence of any sort.
At the present moment we have NO CONFIRMED bottom established, this will take time, months not days or weeks.
However, the October low readings were so extreme I doubt they will be equaled again in my lifetime. In other words, a rising bottoms pattern, in the MCO and 10% Index, is a lock (well never say never but...) That means we will get some kind of a positive divergence signal at the next major low.
Looking at the pattern over the last year, the retests have been about 3 months apart which puts us in January. It's as good a guess as any but I think the best way to gauge it is by using the other price based indicators on the indexes. Also the 50 and 200 day MAVGs will be major resistance. I seriously doubt the indexes will get above the 200 day on the first try.
It is very likely that certain issues made absolute lows recently and that they will not be exceeded on the downside. At the same time, everything will zig zag with the indexes and we all have to decide whether or not to try and hold through the valleys. There may be more risk to doing this than before, it's a hard call because so much will depend on what the financial wizards do to try and fix the markets. Exiting when the SPX nears its 200 day moving average is probably a good strategy until it becomes clearer what the longer term outlook may be.
The following weekly chart of the SPX is a little messy but what I've draw in here are two channels using fixed slopes 1 point per day (blue) and 2 points per day (orange). Several other timing cycles point to the spring of 2009 for what I would consider the first real chance of forming some sort of bottom. This market remains in a steep downtrend and it is very likely all rallies will fail below the 200 day moving average (roughly 40 weeks, not shown)