I expect that tomorrow will be one of the most volatile and dramatic days in recent market history. Friday’s have been tough lately and since this one precedes a long weekend, it will be especially challenging. Additionally, it’s the end of the month and with all the declines during August, there’s probably some window dressing that still has to be done. I suspect that a lot of it has been put on hold until we get the info the market has been waiting for.

The economic data will likely spur a wild bunch of betting on the Fed Funds Rate cut most investors have been fantasizing about. Tomorrow morning we have Personal Income and Spending, PCE Inflation, Chicago PMI, Factory Orders and the Michigan Sentiment revision. All that before Chairman Bernanke gives his Jackson Hole lecture upon which too many investors have been basing their buy-sell-hold decisions. Once Chairman Bernanke is nearly done speaking, it will be game on for the rest of the day. Just remember that volume has been extremely light for the past two weeks, I expect that to end tomorrow. And as for the argument that not much will happen while most of the important traders are on vacation - this last Friday of August will test that legend.

If you are still reading this, I suggest you should get some sleep - Friday August 31st is likely to be one for the record books and you’ll need all your strength. If Chairman Bernanke gives bulls what they want and bears what they fear, I expect there will be a massive upward spike. If Chairman Bernanke has reason to stick to a neutral bias in his speech, there is a high probability of a meltdown.  Plus or minus 3% should not be a surprise.  Usual visitors to this site will note that I rarely make forecasts like this, in this case I felt it was warranted.