While today's volatility and low close were disappointing signs for a bottom, there were several positive developments. The TRIN closed around 5.80, another high reading. The McClellan Oscillator held up. Absolute Breadth reached its third highest reading since the crash of 1987. Volume today was slightly lower than on yesterday's rebound. The Qs closed above Monday's close and above the April 2010 high.
Of course there's nothing saying the market can't go lower, but the signs are beginning to build indicating that at least a short term bottom is at hand that could last for a few weeks. One thing is for sure, I would not be taking any new short positions right now. Even if the market fell much further, the risk of another day like yesterday are just too great.