Too many people, myself included, have been expecting a relief rally followed by a retest of the lows. The market decided to flip the script and cut the relief rally short. I don't think that we are now headed straight down. My best guess is that we see chopiness for the next few days, with an upside bias. The reason being that we are still very oversold.
The slowdown in Europe is beginning to have an effect on corporate profits. Valuations are not very demanding right now so as long as there is not a complete collapse in profits there is no reason the market has to go lower. By the same token its unlikely that the market makes a much higher high than we saw in early April. I believe we are in a trading market where one can buy oversold and sell overbought.