S&P down 3% - is this the leadup to a Monday plunge?

Looks like I may have started this blog at an interesting time. As I noted Tuesday, this week's market action has been terrible: after a substantial down Friday, Tuesday attempted a big turnaround that failed. Then yesterday was choppy and went nowhere. Today was a further step toward a plunge: the market was down 3% across the board. The market needs a turnaround on Friday, a reaction to show that some people think the market was oversold. Otherwise, if there's even a 2% drop tomorrow, it could spell big trouble for Monday.

We've seen several of these 7% drop days in the past: 1997, 1998, and 2000 all had them. In each case, the market fell roughly 7%, then turned around and rose over 3% the next day. There were a few days this year that it was happening again, but was aborted by surprise Fed action. If Friday is bad, then don't be surprised if there is another major step toward outright purchase of debt, even stocks, by the Treasury. If they don't, and Monday starts off with a plunge, watch for the announcement then. It's certainly been floated enough lately.

The key to tomorrow is the employment report. If it's better than expected, we're okay. If it's worse, watch out. And REALLY watch out if it's better than expected, but stocks STILL plunge.