It turns out that the big spike down may have been the result of a 75,000 sale of EMini contracts by Waddell & Reed [AP story] Whatever, it completed the setup for the formation of a nice low at current market levels. It's allowable for a the markets to decline a bit more in the next few days but any excess of bullish sentiment has been erased and prices on individual issues seem to be firming. Never say never, but as long as the markets don't collapse from todays levels I believe a reversal is in process. A nasty close to the downside would invalidate my opinion but only to the degree that more time would be needed to complete the bottoming process.
The McClellan Oscillator and its Components Click to enlarge