The way I see it, the averages are down about 25% from their October highs and the news has been uniformly bad for nine months now. Yet, compared with their January lows, both the Dow and the S&P are only down about 5% despite this nine month torrent of bad news.
I think people who buy in these circumstances are not likely to be shaken out of their positions if the averages drop from here. They are probably investors with very long time horizons and with confidence in the ability of the U.S. economy to recover quickly from the current credit crisis. Buyers like these strengthen the condition of the market and set the stage for a big run up in prices once the bad news has been digested.
For this reason I am confident that the market is very close to its ultimate low and that the next big move from current levels will be upward.