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.

Non-Confidence vote in Canada 2pm March 25th, 2011

 It is 2pm Now!

http://www.cbc.ca/news/canada/story/2011/03/25/pol-defeat.html

New All time High in Gold, Silver breaks $38, Expected down move for 1:30pm

This is another all time high day for gold, and silver had a nice move to above $38 today.   So why is 1:30pm so special?  It is the time the official price for silver / gold on the Comex is recorded.  Therefore, as everyone should know already the massive short positions in silver do not want to get margin called which would result on a high price Comex loss.  Leading to a short covering rally or even a short squeeze.  So there is always extra effort on days like today where silver breaks to recent highs to put a lid on prices coming into 1:30.  After this I would expect more stabilized prices.  This has happened in the past and it will happen again, just be aware of the games that players use to control prices of commodities.

UPDATE: Well before I even saw this article from Zerohedge, I predicted that something was up in the silver market.  Like I mentioned previously, 1:30pm is when the Comex records the "official" price.  Well I expected it was just the typical players pushing the market down to save their own skin, well it appears they got help.

And Like Clockwork, CME Hikes Silver Margins Halting Surge - ZeroHedge

The CME announcement can be found here.

The summery of the margin requirement changes are below.



 "As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed below."

 This is the strange part, they always claim that it is due to volatility in the silver market however it just goes up.  That isn't volatile.  Any sharp drops are generally caused by these type of actions which allow larger margin requirements.  What this effectively does is postpone the enviable short squeeze in the silver market and allow more shorts to hang in there just a bit longer.  This is the second time this has occurred in this rally of silver.  November 10th CME also hiked its margin requirement. Which resulted in a drop from ~26.50 to ~24.50 before continuing its relentless rally up.  So another correction could be in order but again it will be a buying opportunity as the entire reason for the hike is to allow more time for shorts to cover which means more buying pressure. 

Weekly S&P 500: Technicals showing weakness

Will not go into depth but just wanted to note that MACD has had a bearish cross over, slow stoch is pointing down signally bearish momentum and the RSI confirms the down trend in momentum.