uuumm the start does not look good...but here is what Shaeffer...

uuumm the start does not look good...
but here is what Shaeffer got to say
4 good reasons for market to recover DOW
Yet, as we enter this week, the market finds itself poised to continue the bounce back that was started on Friday. Topping the list of reasons is that we are entering options expiration week, which has historically proven to be a positive week for the market. Since January 2006, 12 of the 17 expiration weeks have been positive for the SPX. That is slightly more than 70%, compared to about 50% for non-expiration weeks. What's more, this strength has resulted in expiration weeks having an average return between 6 and 7 times greater than non-expiration weeks (0.73% vs. 0.11%) over the same time period.

Furthermore, this week is a Triple-Witching week, which is when contracts for stock index futures, stock index options, and stock options all expire on the same day. While the financial media has been quick to point out that Triple-Witching week has been weaker in the past than non-triple and non-expiration weeks since 2000, there has been a growing change during the past few years. Since 2004, Triple Witching has been, in fact, growing more bullish with an average return of 0.35% in the SPX.

Another interesting factor worth noting is Thursday's sharp drop in the ISEE Sentiment Index. This index is expressed as a call/put ratio multiplied by 100 and measures calls purchased to open relative to puts purchased to open for equity, index, and exchange-traded fund options traded on the International Securities Exchange. This index tagged a fairly extreme low of 74 last Thursday (implying traders opened more puts than calls), when the SPX slipped 1.76% and lost its grip on the 1,500 level. We have found that, since October 2002, the SPX has usually rebounded rather quickly after the ISEE index has dropped below 85.

Also on Thursday, we saw the CBOE Market Volatility Index (VIX) spike 14.7%, jumping to its highest level since March 16. These sharp spikes in the so-called "fear gauge" have proven to be good bullish indicators for the broad market. Since 2004, the SPX has returned between 2.3 times and 3.8 times its average return during the ensuing 3 to 50 days following a VIX spike of 14% or more. For example, after a VIX spike, the SPX returns an average of 3.98% during a 50-day period compared to its at-any-time average return of 1.73%.

Finally, Thursday proved to be a "90/90" day, which is an indicator developed by market technician Paul Desmond. This is simply when 90% of the NYSE volume was down and 90% of the NYSE traded issues were down. When Paul presented his research to the Market Technician's Association (MTA), he found that clusters of these types of days typically signaled an end to bear-market environments. We find it of interest that there have been four such days since February 27th, a period encompassing about 3-1/2 months within the context of a bull market environment. Such widespread dumping of stocks is indicative of the pervasive skepticism that exists among traders in an advancing market, which could have powerfully bullish implications.

As we head into this week, the various extremes we witnessed in Thursday's trading, combined with the positive "expiration-week" effect we discussed could be indicative of a market that has reached a short-term bottom. In addition, the market will also have an assortment of economic readings, which could help to spur some heavy trading. On Wednesday, the Fed will release its Beige Book report, giving a look at the health of the economy before its upcoming Federal Open Market Committee meeting at the end of the month. Thursday and Friday carry key inflation reports in the form of the Producer Price Index (PPI) and the Consumer Price Index (CPI). Any signs of an abatement in inflation could lure investors back into the market this week.

And now a few sectors of note..