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[thoughtpwr]

Have tried to look at this from a logical perspective based upon the sentiment numbers and other things going on to the follow conclusion: Currently in oversold condition at the 200 DMA, I look for evidence that the SPX market rallies in the characteristic savage manner of the last week early during the week. Once to current upward trend lines, I would think the market sells off into the weekend and to a bottom next week with the market at a slight new low relative to this week’s low. Reasons: 1) Buy Signal is OOPS, if opening below Fri’s low = 1906.05; Buy @ low, where it currently stands to open. 2) Most inverse funds have worked into new territory where they are at a new initial resistance level (for instance IWM in form of TZA has new resistance at 19, which late selling on Friday managed to reach). This first encounter at new resistance is in additional to the first time in reaching the 200 DMA in quite some time. Probabilities reside with a rally off of both of these levels. The issue is how high? Estimated at 1955 +/- 5. 3) The fear index is pegged at “1”, and divergences on MACD & momentum at 30 min charts appear to be forming in overnight sessions. Market oversold last Fri and grown more so. 4) One source pointed out in volatile weeks, many funds will short the Fri close (as witnessed), which will be taken off, if the market has a reasonably mild opening. So some of the Fri low, may be reflex related and will spur a rally to at least 1915-1920. 5) Schaeffer historical study showing current volatility in down market has probability of lower close next week after this week’s action., but longer term 2-4 weeks out are positive. Huge open interest at 1905 for OPEX will gravitate to this level if rallying fails. Would expect gap a week from next Mon, if we are headed significantly lower based upon next weeks close. 6) Bottom likely to be retraced if a bottom is in, which correlates to a rally early in the week followed by a weakness. We will see how it plays out.