Well, hopefully the weekend will give our patient, the Market, a chance to calm down and stop foaming at the mouth. Who will show up on Monday - Dr. Jekyll or Mr. Hyde? I'm going to guess it will be the good Doctor and not the evil maniac. Look at the daily Dow:
The short term indicators are now extremely oversold, much more than they were on Tuesday when I thought we'd see a bounce on Wednesday. Unless some even more dreadful news comes out over the weekend about the PIGS, it's looking like the market may in fact close higher Monday.
Need convincing? Check out this dramatic view of the daily VIX:
Over the last two weeks, the daily VIX has gone ballistic. This is a classic exponential rocket, crazier than what happened in January, or even anything in 2008 at the height of the Lehman panic. I suppose the VIX could go higher Monday, but the odds are against it on a purely technical level.
That said, the weekly Dow has broken below its latest regression trend channel and amazingly is still looking overbought on all the indicators. So my plan right now for next week is to buy on Monday for a few very short term trades, then wait for this correction or whatever it is to work itself out. I'm still 40% in cash but not in a big hurry to do any major shopping just yet. Last week hurt, but it was not as bad as it could have been. I was down 4.12% on the week but that still beat the Dow which is about all the positive spin I can generate.