While the impulse pattern in the Qs did not appear complete yesterday, the pattern in the Dow and SP500 was complete with 5 waves down. This has led to a small but sharp countertrend bounce this morning. The pattern in the SP500 this morning appears to be a zigzag confirming that it is countertrend.
If the bearish case is correct, we should see the market roll over by this afternoon in an even more severe 3rd wave of minor degree. If the recent rally highs are exceeded, then the bearish outcome will be of much lower probability. However, the reaction to the new home sales data does not appear positive, and Bernanke just said that a "sustained recovery still in question." Doesn't sound like the bullish case will hold up, but we need more downside to confirm that wave (C) is indeed underway.