The Weekly Report For August 22nd - August 26th, 2011

Commentary: After bouncing higher last week, the financial markets reversed and had one of its worst weeks in years. Volatility exploded and stocks were sent back toward their recent lows. Selling was widespread and the number of stocks that were able to weather the storm was almost non existent.

For the week, the S&P 500 ended down almost 5%. We have mentioned the possibility of a continued bounce higher, and unfortunately for bulls, that doesn't seem to be the case quite yet. These scenarios often play out as forced selling due to >SPY) ended the week down nearly 5%. Many traders were eyeing the move back toward the neckline of a >DIA) ETF also came undone this week as it sliced through multiple levels of >moving average and a prior pivot low. This level was too strong for the bulls and as a result we've seen a move back toward the recently lows.

The Powershares QQQ ETF (Nasdaq:>IWM) ETF. The ETF closed down by 6.5% for the week. IWM is well below its base and has clearly formed a topping pattern. While there is a good chance IWM can bounce from this deeply oversold level, it will take a lot of work for it to even bounce back to the bottom of its prior base. That level stands at $77 and is still almost 18% away.

The Bottom Line