I consider this chart somewhat a stand-in for bullish sentiment in that the market is certainly not "cheap" nor oversold, nor a screaming buy. You can only keep an overly majority of stocks in a super bullish configuration for so long. P2 did it better than any rally. If this chart moves down to the red circle area as it did in the low of Intermediate (1) of Primary  in early 2008, then we have a long way to go.
[Update 8:42PM: The CPC has so far moved in a way that is much consistent with a Minor wave 1. When you compare the Minor 1 of Primary 1 in 2007 with where we have Minor 1 marked now, the 5 day moving average has moved the same amount. This is even despite that the 2007 move took much much longer to play out.
So far though the wave 2 on the CPC has not moved down to where it was in 2007. There could be many reasons for this mainly the moves now are happening in a much quicker time frame. Also in 2007 the NASDAQ topped in November so comparing is not exact. (The final reason could be that we have a big move up coming and the market has not yet reached its Minor blue 2 peak.)
So indeed coming off a cycle wave top in 2007 may not be the best comparison for a Primary wave top.
However seeing where the CPC moved in 2007 even higher on its wave 3, we have plenty of room to move to an equivalent spot higher in the current market. Its certainly different circumstances in 2010 versus late 2007, but overall, shifts in sentiment always seem to move in similar fashions regardless. We shall see how it all plays out.
[Update 7:30PM: Despite the speculation on what the German short ban might have as a short term effect on the market, we have to count what we have in front of us. Today's down move was not a textbook impulse structure but it certainly is serviceable as an opening down move in a Minuette (iii) of [i]. It sure seemed like every little pop was relentlessly sold in to versus "buy the dips".
Its like everyone was waiting on everyone else to do that power up crap. Well volume was again on the heavier side and the selling overcame the dippers.
The squiggles don't yet count quite as a 5 wave move from 1148 peak but a new low early tomorrow will do the trick.
Also notice that the "third of a third" (a strong downside part of wave Minute [i] of 3) would be a break under 1110 which could induce some stop loss selling. This is a bear target is to break those stops, and close under the 12 point SPX gap created just only a few trading days ago. Then a close under the 200DMA.
(note: I am using the Wilshire for squiggles - it makes better ones - but I mention 1110 SPX in the chart as a key support)
This would be the alternate count if the SPX traces some kind of wave [ii] flat or expanded flat based on some kind of short ban. The next hit on the downward trendline would likely be a Minute [ii]. So that would be why I would bump up the wave degrees in this case as a multi-day flat would count better as a Minute [ii] probably.
But that is getting ahead of things. The main idea of this chart is that a flat potential exists if there is a short squeeze. The "squiggles" from today were not the most impulsive down looking bunch so perhaps the move down today was a (b) wave in a flat.
We'll see. As I said last week, I expected early intervention into the market short-selling rules in an effort to keep the market from dropping as that has now become official policy of all governments. It has only been a few days and already we see one government enact something with more likely to come.
At any rate, we'll certainly know a lot more in the overnight action.
Today hit a nice wave (ii) retrace target in an a-b-c form so we'll go with that. The move off today's peak would then be most of wave i of (iii) of [i] of 3 of (1). Got it? heh
Here is what that might look like:
The bottom line is the primary count points downward for a long time if this is P3. So how it bounces down there will at times catch the market off guard. Positive divergences can be wiped out and will be in P3 on many timescales.
On a next larger scale we're probably looking for the bottom of Minute [i] of Minor 3. The price low of Minute [i] would "look" correct down around the wave 1 low or even a bit lower.