S&P 500 approaching previously stated levels

Two levels I mentioned in a previous post: the 1261 - 1265 range and 1296 to 1300 range.

These are the next significant levels, so watch for selling in the new year.  Remember no way the markets can disappoint Santa, higher the market goes up more people shop, translating into a "recovery".  That is the plan of action.  So I do expect that drifting higher for a bit longer, but  January / early February could be an interesting time.

I think the January options expiration (Jan 22) week will be an interesting one.  It will be interesting to see how the holiday numbers come out this year, I have a feeling that they are decent but honestly hope they are not very good as that means people have finally realized that they need to retrain their spending to pay off their debt.

Strange thing is the continued divergence with Gold / silver and the markets.  As the markets drift higher, gold and silver have flat lined.  I have a feeling they will converge quickly, either gold / silver jumped 2-3% or S&P 500 falls 2-3% or a mixture of gold/silver up and S&P 500 down.

As you can see since December 9th, silver has not gone anywhere.  Last 3 days have been exceptionally quite.

Not sure which direction but this beast might come alive soon.

SLV 3pm December 20th

A couple of POMOs happened today with 10+ billion in bonds being purchased.  As you can see they affected the silver chart dramatically.

Can you guess where they happened?

Important to note the volume around 2 pm.  In my opinion, that volume spike has placed a decent resistant point 28.65 on SLV.  In the morning. made a trade 7.03 to 7.16. And I am going to get a position by the end of the day.

Cyan = entry
Purple = exit
Start = 11am ish

This time period coincided with the POMO


Thought this was a very interesting chart.

From: ZeroHedge.com

S&P 500 Review - December 19th, 2010

Markets have continued to rally.  The Slow Stoch is embedded meaning strong trend.  The MACD histogram is starting to decline however the MACD line is well above the 0 level.

It is still my belief we are in a 5 wave, and therefore a corrective phase is approaching.  From the recent highs the corrective phase most likely will take the S&P500 to 1167 (38.2% retracement), 1140 (50% retracement and 200 day MA) or 1120 (61.8% retracement).

 30 min chart - Slow Stoch is overbought, expectation of small pull back Monday or Tuesday.


I have some put options on a 2x bear etf for the S&P500 for a January expiration.  In the mean time, I have been able to successfully play SBB and EDR on the TSX.  These metal mining companies have been hit hard last week as gold and silver tumbled.  However, looking at the current gold / silver price action it appears that they may have a good week.


Current gold price from Kitco
Current silver price from Kitco