Week Ahead: Will We Bounce?

With the S&P looking vulnerable, will stocks retest the August lows? In a nutshell we say yes, the market will retest the lows. But we also believe that technical signs suggest the lows should hold.

The trouble is that  too many investors expected the stock market to just bounce and historically that is not what happens. Typically the market makes 'W' bottoms; we make a low bounce and re-test the low bounce and re-test again. This pullback could provide an important - and potentially bullish tell. As we pull back we will be finding out if people will again buy stocks at the August lows (of about 1120 on the S&P). How it plays out over the next 3-4 days will be critical.