S&P 500 update and Silver potential breakout

Above is the S&P 500 chart.  Back to the same old low volume float.  I still feel strongly that we will see a test of the 200 MA before the end of the year.  However, there is potential that the market will continue up to make new highs which will be a definitive wave 5.  If this is the case, expect a deep correction.

At some point the Fed will have to raise interest rates or at least announce that QE2 has ended with no QE3.  What is holding this market up has been the daily POMO so removing this will inevitability lead to a deep correction as the true price will need to be discovered.


Crazy stories from Zerohedge show that the US is weeks away from a full out default on US debt.  It is laughable for this to be allowed which is why I totally expect them to raise the ceiling asap.  A default of the worlds reserve currency would put global prices of commodities and companies in a state of crisis / panic.

  Break of the 38.00 level should quickly lead to an increase to the 40.00 mark.  My expectation is 50 will be hit by the end of summer or early fall. 

TRE.TO Sino-Forest and JASO: JA Solar, profit targets

Rarely fib levels through time work in my opinion however, this move in very interesting.  The impulse wave from July 2010 to Dec 2010 encompassed 2 time fib levels, the correction was exactly within the 3rd time fib level.  If this is true, then we could conclude that an impulse phase has just begun. 

Another interesting fib relation is the fib fan.  Connecting the highs provides the baseline and the fan draws straight lines that are spaced using fib %.  The bottom two lines provided support for the pull backs during the correction phase.

Baring any full blown collapse of the equity market, I would expect a move past the 24.00 level.  Currently holding 23 strike price April call options so I will look to take profits when the 24.00 level is breached hopefully some time this week.

The support JASO is currently hitting dates back to the first half of 2010.   After 5 months of correction it appears that solar plays might be back in impulse mode.  I would consider a serious position if the 200 MA and 50 Ma get reclaimed within the next week or two.

Potential déjà vu, which would indicate that the buyers in mid March are back buying at the same level as they were.   Tomorrows volume will confirm that there are buyers willing to strongly purchase JASO at the 6.52.

Why hold a short position in the S&P 500

This is an hourly chart of the S&P 500.
The fibs from the highs to the lows show that the short term target if this continues down will be a test of the 1300 level.
The main thing to observe is the extremely strong down move in the last bar of the March 28th, 2011 trading.  As you can see there was a break of the trend line.  Tomorrow a fast move could occur in the morning to the 1295-1300.

This is the possible scenario I am currently expecting.  At that juncture, I don't know what will happen.  If there is a bounce it could be a significant bottom in the next rally up.  or break through the 200 MA on strong volume and continue lower throughout the summer.

The technicals are still quite bearish especially on the hourly chart.  On the daily the stock is overbought and MACD is still holding under the 0 level indicating the intermediate trend is still bearish.

I bought call options on SDS which is 2x bear ETF before the S&P500 broke above the 20/50 day MA.  These are for April 19th, and expect that things will roll over again to test new short term low.

UPDATE: 1 minute SPY chart - Pay attention to the volume in the last 30 minutes.

Who's side do you want to be on?  The people with the money or the people that were buying between 12pm and 3pm?

IMG.TO IAMGOLD - possible projections -

IAMGOLD (IMG.TO) has broken to a new high last week. I looked to a 24.00 strike price Apirl 19th expiration date as a high probability vehicle for profits in this case.  If the all time high (cyan line) holds, a fast move could be expected to begin next week.

A strong move next week would be a good time to exit these call options as April 19th is a few weeks a way.

I have a May options position on YRI on 13 strike price.  I expect potentially gold and silver continue to correct a bit but by August should be substantially higher.

An interesting comparison of the 1979 explosion in silver prices with current rally.