Last week was a rollercoaster for US stocks. The Dow whipsawed wildly by almost 2,000 points overall.

On Thursday morning, Rick Pendergraft at Investor’s Daily Edge was predicting a bounce over the next few months based  on the chart of the Dow, record-breaking volume on the major ETFs, and the VIX breaking above the 37.50 level.

Then came the rumors of a massive government bailout along the lines of the Resolution Trust Corp that would hoover up the bad debt of banks that sent stocks rallying and skewed the markets. However, Rick still reckons that stocks will rally over the next couple of weeks based on the chart below…

I won’t say this is the end of the bear market, because there is a lot of uncertainty out there right now and many fundamental changes will come about over the next few months (another earnings season, the election).  However, I would look for a rally over the next few weeks, possibly taking the Dow back up to the upper rail of the channel.  Previous bounces have taken two months to get from the bottom rail to the top rail, but that would put us into mid-November, beyond the election and beyond earnings season.

Right now, your best bet might be to sit on the sidelines for a few days until this mess gets sorted out.