Volatility + Double Dip = Retest of 2009 Lows

The attached chart shows the extreme volatility of the U.S. stock market from 1994 to present (see first attachment -credit to MarketSmith).  In this "Special Report" we will describe the extreme moves along with a narrative to explain what drove the volatility.  The chart shows the up move from 1994 to 2000 (440 to 1550), then the downswing from 2000 to the end of 2002 (1550 to 770).  Next, the chart shows the up move from 2002 to October 2007 (770 to 1570).  The S&P 500 declined to the March 2009 low at 670.  This was followed by the upswing to April of 2011 (1340) as the market doubled within 2 years (this has only happened twice before in history).  Presently, it looks to us like the next down move is in full swing as the S&P broke down through the support of 1250 and fell as low as 1100 , which we believe will be broken sometime this year.