The good news is that the indices held steady after a very poor week. The bad news is that we still haven't been able to bounce, and breadth was quite poor.
What has been most notable about the market action this week was that the strength was so limited. We managed to gap up on Thursday but then sold off all day and struggled again today. The dip-buyers just aren't stepping up like they did all summer long but buying dips is much tougher when we aren't in an uptrend.
Next week, earnings season is in full gear, and that will change the nature of the action to some degree, because there will be more focus on individual stocks. There will be some winners and losers regardless of what the indices may be doing. On the other hand, we saw today that there was a sell bias when the results from Wells Fargo (WFC) and JPMorgan (JPM) hit. That is a theme that could easily develop further, and we'll have to watch carefully.
As far as the big picture is concerned, the market is now in a confirmed downtrend, and to me that that means stand aside and wait for things to set up again. We may have a tradable bounce, but the key word is "tradable." If you catch a move, take the profit and run. There will be opportunities to load up again.
Earnings season always gives us some interesting new names to consider, so don't be too negative. It is an ugly market right now, but if you have taken defensive steps, you should have plenty of cash on hand and be ready to find some new merchandise.
Have a great weekend. I'll see you on Monday.