We are still in oversold territory and the tape is reacting as such…pretty much bid only all day so far.
While volume has selectively mattered in recent years, the spike in volumes at downside price extremes as measured by oscillators and % off the respective recent highs has been a good indicator of potential reversal zones.
Looking at the chart of the SPY below note the volume spikes in 2010 and 2011 both came within the same zone while price was close to forming important bottoms.
Last week’s volume spike while meaningful for 2012 thus far still leaves much left to be desired for when compared to the previous two years.
From that point of view we likely have more downside after an oversold bounce here has run its course in the near term.