All of the indices are well off their early lows, and breadth has improved quite a bit but is still negative. Unfortunately, a quick bounce back from the sharp selloff this morning is not what we need to produce better technical conditions. The market's problem recently is that the indices have not done a good job of reflecting the weak action in many stocks. We can't get a good tradable low if the indices are still going up while individual stocks are sinking. We need some correlated selling action to persist for a little while to get a broad washout.
The good news is that there is some relative strength in the stocks that were lagging the last few days while the indices stay in negative territory. It is a reversal of some of the rotational action, but it would make trading much easier if the big-caps and indices would catch up to the broader market to the downside.
The selling today is a step in the right direction as far as moving us back to a market that favors stock picking, but it has not gone far enough yet. A very quick bounce doesn't do much to fix overbought conditions.
I am feeling more optimistic about doing some buying now, but I'd prefer to see a weak close and more selling pressure first. There just isn't any good, solid support forming yet.
Corrective action needs to create some fear and worry in order to be effective. A gap-down open and a straight-up bounce may make for some good quick trades, but it doesn't produce better long-term conditions. We need less confident buyers and more nervous sellers for a healthier trading environment.