S&P 500 Analysis | Look out Below | Mid-term bearish but watch for bounce this week

A in-depth analysis on the S&P500 long term outlook was completed last week.  Today we saw something that was "unexpected", when everyone thought the relief rally would occur after the debt deal was signed, the market had different thought process.

INDEX	VALUE	CHANGE	% CHANGE	TIME
DOW JONES INDUS. AVG	11,866.60	-265.87	-2.19%	08/02
S&P 500 INDEX	1,254.05	-32.89	-2.56%	08/02
NASDAQ COMPOSITE INDEX	2,669.24	-75.37	-2.75%	08/02

 I sold my bear position today a bit too early at around 1-2pm but with reason.  The markets are extremely over extended, the likelihood is a rally will come the remainder of this week.  My game plan is to wait for the market to trade back to the 1290ish level before getting a 2 month options contract with the expectation of the Head and Shoulders predicted drop which comes in at 1150.  There are serious issues and this market could continue its decline next week.  However, the government of the US has just extended the debt limit by another $2 trillion which means any Stimulus talk, QE3 talk, etc could send this market roaring to the upside.... but remember this roar to the upside is not because companies in the US are doing better or because the economy is getting better it will be due to the fact that the USD which is used by companies to report earnings / Market value will be devaluing.  Making 10% more revenue but the currency which the revenue is based on has declined 10% in the same time frame is still a net value increase of $0.  

If the predicted path of last post is correct, the next couple years will be quite rough.  Again this is a long shot but anything can happen at this stage of the game.

Here is the chart from my previous post without comment