hm, it seems right now we're in the "investment memory is long" phase, and have yet to reach final capitulation.
That's my impression, too. But one should be careful, to build up trading strategies on such assumptions. My personal conclusion is to hold on breathe, not to sell but also not buy, waiting if capitulation happens or not. Overall market sentiment is looking confused and puzzled.
There could be some kind of shock upwards, that'll burn enough shorts, and when the volume goes back up and the rallye manages to gain speed, we may as well be in another full-blown bull market again. Only trade on your assumptions, if you're ready to lose, as well!