At some point, we should get a "capitulation" rally -- with the bears and shorts throwing in the towel. This could lead to a +3% day or more... We can't tell when this is coming -- but bad news has been "rolling off" the equities for a while. Overnight, there was some good news for banks/financials (Bank of America will pay off a chunk of TARP money) -- and the markets are calling slightly higher.
Currently, there is still a lot of bearishness out there -- making a good case for a contrarian bullish call. On the other hand, a capitulation rally will be a sign of a near-term top. The financial markets contain a lot of randomness -- but students of "technical market action" can put the probabilities on their side.