the week ahead of 08-15-2011

Last week was notable because we had 4 days with over 400 point moves.  That my friend is extreme volatility.  Can this continue?  I suppose it could, but the evidence suggests we have set a bottom for now.  Does that mean we go up without pull backs the coming week?  Of course it doesn't.

We have a 22TD cycle that should bottom by late Tuesday or early Wednesday.  But with the 20 week and possibly 3 year cycle having bottomed (at least I believe they have) there is an easing of downside pressure.  So we probably revert to +/- 100 point DOW days (+/- 10 points S&P).  So by Tuesday close I believe we could easily show a 20-30 point pullback to the 1150 area.  Once the 22TD cycle bottoms we should see an upside move into the end of the week (20-30 or so points up).  So if we lose 20-30 points in the first half of the week and regain them in the second half of the week  the week will be fairly flat.  Let's say we trade in a 50 point range for the week 1150-1200.

Here is an SPX chart:

GL traders.  Reality and projections don't always match.