Both the July 2010 and August 2011 lows are coming at the end of a steep 11 day decline, both being greater than 10% and both followed a NFP date by one day.

The low of Monday July 5 was set around 7 p.m. 3 points below the previous week low, and the August 7-8 low is being set at 5 p.m. Sunday night less than 2 points below last weeks low.

Recent short-covering rallies have been +34 and +36 points on Wednesday and Friday last week (not including Friday's +49). These are roughly 3% short-covering rallies. The initial short-covering on July 5 2010 was +35. The overnight rally was +29 points. And the overnight puke into 4 a.m. was -27 points. The -27 point puke approximates the -27 point puke seen a year ago on Tuesday July 6 2010, a day after the low of July 5 2010.

The initial 29 point rally overnight wasn't sufficient to break the bearish momentum. If a low is being hammered out, the bulls will need to maintain the point of control that they assumed overnight in the 1167-1168 handle. Below 1167, the probability of new lows will increase and the correlation to last yrs lows will decrease.

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