The good news is that we were able to shake off the Japan earthquake, lower-than-expected consumer sentiment and worries about further unrest in the Middle East. The bad news is that today's market looked like nothing more than a very low-volume, oversold bounce.
The bulls were able to apply a bit of a squeeze in mid-afternoon trading, but fizzled slightly at the close. There was little urgency to the buying, although breadth did improve nicely during the day.
If we look at the big picture, the action today did little to change the notion that we are seeing technical deterioration. We recouped less than half of Thursday's losses, and did it on unconvincing volume. What we have to watch for next week is another rollover and a test of Thursday's lows. If the bulls are going to run this market up any further, they will need to put forth a better effort than what we saw today.
This correction is doing a nice job of washing out the overbought conditions that have plagued us for so long, but it takes some time for new long setups to form. At this point, bounce attempts should likely be viewed as selling or shorting opportunities, rather than an indication that we are making a lasting low.