The routine late-day bounce took some of the sting out of today's action, but it was still another poor day for the bulls. Many were optimistic that the market might bounce back quickly and were caught by surprise when the Nikkei got slammed overnight.
In addition, oil remains quite volatile as reports of problems in the Middle East continue to roll in. Overall, it is just a very uncertain environment, and there aren't many good reasons for the buyers to step in -- especially since we've seen a series of failed bounce attempts lately.
The market had been crushing skeptics with vigorous bounces for quite a while. But there has been a significant change in market character lately, as evidenced by the failure of this oversold bounce just as the bulls were starting to regain their excitement.
The market is still oversold enough to see a further bounce, but the big picture is not very pretty. We clearly are seeing the development of a downtrend with a series of lower lows and lower highs. The lack of good leadership and the nearly nonexistent pockets of momentum support the thesis that the market has undergone a shift in character.