If we close down Monday then significantly more downside can be expected. On the other hand, a small rally this week isn't impossible. The markets tried over and over again last week to rally but bears sold into each attempt. Volume could be on the low side as investors wait for the Fed to announce what they are going to do with the interest rates. Conventional wisdom has it that the Fed, especially after this downturn, and fearful of a Y2K panic, are not likely to risk a rate increase at this time.
Any rally is likely to be seen as an opportunity to lock in some profits and move to the sidelines.
Then there is that old Dow Theory lingering in the back of every trader's mind. A fundamental tenet of the theory is that for new market highs to hold the three Dow indices must confirm the trend. The Dow Jones industrials, while setting new highs all summer, have not been followed by the Transportation or the Utilities. In fact, both show a strong bearish trend since July. Rising oil prices aren't helping matters.