SP500: Trading Range Before The Plunge?

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Until the analogy with 2011 is invalidated, I’m going to operate under the assumption that we still have ahead of us a high-volume hammer candle on the weekly chart.  I’ve marked up a few things in the SPY chart below as guidance on what we may expect:


The thin blue circles mark the analogy that I’m working off of.  We still have not seen a big, high-volume day that reversed some steep intraday losses.  The thick blue line of the volume chart is what I’m expecting to get close to (if the analogy is to remain valid).  On the MACD panel, the green circle is our past pattern and the purple circle highlights the black line/red line crossover, mirroring the downturn in the market and signaling that the short-term signal is still trending down.

Next week or so is when I expect to see a hammer candle, which would make me feel much better about the analogy and give me an idea of what the lower bound in the range for the next few months will be before the big plunge (which may not be much more than 350 points).  I still believe, if the analogy is correct, that we will make new highs before we see a correction.