While breadth has been miserable for all of the month, the MCO and 10% Index are very very oversold. This coupled with the positive divergence in the SUM index can be interpreted bullishly.
Although I view the 10% Index as indicating the need for a retest of the lows, this does not need to occur for a few months.
It seemed like the volume today was soft until late in the day when it accelerated and this may indicate that the market may be sold out at this point. Any rally here could be potentially explosive since the initial overhead supply has been exhausted.
I've noticed that on the days when the market continued to exhibit weakness, after a moderately positive opening, that the advance-decline numbers become negative fairly rapidly (advances dropping below 800-900) So far when the AD numbers have become lopsided (700-3000) early in the day, the market seems to have a hard time reversing.
Any rally out of the hole we are in may start with fairly evenly balanced AD numbers something like 500-700 more one way or the other. In this case it doesn't seem to matter which way the bias is. A strong rally can rapidly turn the AD numbers positive (but hasn't been able to when they are +400 to -3000 like today.)
Click to enlarge
I've marked in a generalized wave count for wave 3 or C, depending on the fates. We are getting close to something which looks like a complete pattern.
The 10% Index hit a -1065.8 today, still above the previous low near -1200. With the MCO at a -317.18 we could get a very strong bounce or one more nasty day, and another 500 points down the drain. Gotta be careful here.
The cycles are tentative, they haven't been working lately, but I've got to try something.