I ran several tests tonight looking at such things as RSI, Stochastics, percent drops and consecutive lower closes on the major indices. The story was the same whereever I looked. Chances of a bounce within the next 3-5 days weren't much better than a coin flip. When I took into account the longer term picture of the market and included such factors as the market is trading below its major moving averages or that is has just recently broken below consolidation levels the results looked even worse. In most cases risks outpaced rewards by a fair amount and a coin flip was generous odds.
A bounce may happen any day, but the VXO study I posted the other night laid it out pretty well. Risks remain elevated. My Capitulative Breadth Indicator (CBI) was the one piece of evidence showing a strong edge to the long side. As I noted earlier, that edge has dissipated. Stepping back and waiting for a better edge to appear looks like the right thing to do at this point.