When this market exceeded my 1369 projection estimate from last Friday I looked around and my calendar and realized why were even more bullish than expected. The market follows the Taylor sequence which was discovered back in the 30's and 40's. It trends in sequences of 3 days with a variation of 4-5 to knock out the amateurs and stops/alogos . It mostly just travels in sequences of 3 and 5 in recent years. But, the big reason for the falling VIX and high complacency is the fed meeting coming up at the end of the month with a rumor going around about QE3 as soon as July 31's. http://www.federalreserve.gov/whatsnext.htm While I don't think it will be announced, there is also the Jackson Hole Consortium in August which will give investors hope if there is no announcement at the end of the month. So, bottom line is... Rally cycles will be "logicalized" and rumors will be spread about QE3. While sell cycles will be "logicalized" driven by EU fears. The more powerful influence on supply/demand from here until Jackson Hole is the threat of QE3 to short positions and the optimism of the longs. If QE3 does come through I expect this S&P to just about lock limit up, followthough rally for a few days... Consolidate through a around a 5-7 day weak sell cycle then march upward toward 1500. Everyone has gotten so used to what happens when QE occurs that the market may just have an upward crash as the bears mass panic in fear of being driven 200-300 handles underwater. The worse the economic data is and the more depressed Bernanke sounds about the economy the more bullish the market will be. Because expectations of QE3 will rise.