I've been saying over the past few days that I expect the market to bounce into Bernanke's Jackson Hole speech, which is scheduled for 10AM Friday. Starting a few weeks back, I've had a good opinion that QE3 would not be announced and that it could be a letdown. I would love to tout myself as an expert in the economy, but the opinion was crafted based on input from some the writers that I read every week, and who's opinion I value. of course, the end result remains to be seen, but not for too much longer.
It's a holiday week and there is finally a little excitement (which is what usually happens on the downside) as the market has decided to gap down and continue lower, although not at any neck breaking pace (yet). But the scope of how far and deep is the question.
At this point, I don't think we get an all out sell-off, but it's certainly possible. What I think is MORE probable is that the speech is taken as a disappointment, but it may not be on all levels. While Big Ben may not put QE3 to work, he could extend Operation Twist, as well as speak in a manner that breeds confidence that he is ready and willing to ease if need be.
There are more and more people coming onto the no QE3 side, which may dampen the disappointment in the end, and have us limp into the long weekend instead.
In the end, you will get a lot of super gurus that will say "as called" or some other nonsense, when all they called is 6 different opinions, so they couldn't be wrong if they wanted to (which they 90% are). See, their broken clocks are only right twice a week, not twice a day.
I still think we try to bounce today at some point, but I'm not confident enough to guess at where, or firm enough in the opinion to hold overnight.