S&P 840 likely

Given the recent market action I believe the market will decline to about the 840 level on the S&P before making any sustainable advance. At that point the market will have worked off its overbought condition sufficiently enough to launch another leg higher if it still has legs. However, I'm open to the idea that if we get the drop I'm expecting and subsequently the market rallies, makes a lower high and turns down, an IT top could be in. This is what occured at the top in May of last year. Somehow I have my doubts it will play out like this but I will let the market do the talking.

As seen by the charts below there is a negative divergence with the MSO technical indicator and the rise of the market in the past couple of weeks. This doesn't necessarily forecast a change in trend but it does indicate that at the very least, a mild correction is immanent which is why I'm targeting 840. In addition to the negative technical divergence, lagging financials and a "smart money" put/call ratio indicator I track confirm the notion of an immanent correction.




If the proper set up is there I will be looking to purchase SPY puts or perhaps I will be a FAZhole for a day and purchase FAZ of the troika of death. I hope I don't become another one of its millions of victims.

I was kicking myself today watching TBT soar after it dropped in the morning. The drop was too quick for me to pull the trigger. Oh well, serves me right for trying to play all of the wiggles...At the last fed meeting Bernanke torpedoed bond yields with his announcement of Quantitative Easing. This time I doubt any mention of it will result in anything but a knee jerk reaction.