As impressive as the week of September 12th-16th was with the key indices gaining over 5%, this past week was equally as impressive, but to the downside. The bears came out in full force this past week and sold just about every asset class off. For the week, the Dow Jones Industrial Average (chart) lost 6.41% of its value, the S&P 500 (chart) fell 6.54%, the Nasdaq (chart) gave up 5.3% and the Russell 2000 (chart) finished down a staggering 8.66%. Even Gold (GLD) (chart) which has been a Wall Street darling over the past couple of years, was clobbered this week.

While the Federal Reserve came out on Wednesday with a very somber outlook on our economy, this should have been no surprise. One may ask, why such a dramatic market reaction? Well, my take is that this also is nothing new. For the past two months or so we have witnessed breathtaking market swings such as what we have seen over the past two weeks. Without a question, volatility is here to stay. I would not expect an end to such sensational market moves until there are definitive resolutions to the EU debt crisis as well as our own government forming effective policies to begin a recovery for our economy.

Recently, we have been speaking about the markets trading in a range (blog), in particlular the S&P 500 (chart). Now the S&P is near the lower end of this trading range and should it break below the 1100 mark, most technicians believe the next stop would be the 1020 zone. Let’s see how the markets trade early next week and we will visit a more detailed technical analysis by Wednesday.

Have a great weekend 🙂

~George