This chart focuses on the US stock market's breadth. This breadth indicator tracks New York Stock Exchange daily advances against decliners, and is averaged over 21 trading days or one month. Furthermore, the measure also includes daily up volume against down volume, which is also averaged correspondingly.
What's interesting about this chart is that even though the US stock market has held up relatively well, its internals have been deteriorating for quite some time. On average, there are more and more stocks declining. Also, more money is exiting the market, creating selling pressure via volume. That said, the internals have not yet reached an oversold level, which historically is where a bottom would occur.
Source: Short Side Of Long
Do markets have to become extremely oversold? Definitely not. Many times throughout the current bull market -- and in previous bull markets, too -- breadth did not become oversold which meant that corrections were quite shallow. However, oversold breadth measures work most of the time, a signal of a more sound bottom. In plain English, a better probability to profit when buying panics.
The chart does not include Monday's breadth data, as selling pressure on Greece might make the above measure deteriorate further.