May you live in interesting times!

[Chris Outwater]

We are living in interesting times and the Chinese are part of it. But I don't think they wished this on all of us. They are intrinsically tied into our financial fate.
Yet, we are truly at a crossroads. The bears are becoming harder to find as the markets shoot up with better than expected news.
So, we are on the teeter totter, right?
We could easily pull back to the 50/200 day crossover, if we run out of steam. BUT, perhaps we will see 1050 or higher as bears give up and the sidelines money piles in, for fear of losing in on a good rally. Yet, Suttmeier---he is a pretty well respected chartist, has just released his market call and he said we will see a near term spike up now---BUT he thinks we will see a drop below 900 before we see 1100 on the S&P.
Interesting prediction. S&P would have to drop through a lot of support!

[Steven Vincent]

I think we see a spike into the Fed meeting on Wednesday, or at least maintain current levels. I think the Fed is going to either announce an end to Quantitative Easing and/or announce that its bias has switched to neutral or even inflation watch and it will discontinue some of the emergency liquidity programs that it put in place during the crisis. This will cause a spike in the dollar and an initial selloff in equities as markets fear that the Fed is taking away the liquidity punch bowl and the party is over. This will create a buying opportunity. Maybe the last good buying opportunity until things really start to take off.

Of course things will be different if the Fed essentially does nothing and changes nothing on Wednesday. Standing pat may accelerate the trend in stocks and abort the dollar rally.

[Chris Outwater]

Thank you. You put your finger on it. The Fed meeting on Wed. could be the catalyst. I agree---continued upward pressure on equities Mon and Tue and then the Fed meeting. If they take the QE punch bowl away, or hint at doing so, then that could spook the markets. The USD reverses its secular downtrend and continues its rally (at least temporarily), commodities and equities sell off. I can't think beyond that whether it will be a buying opp or not.

[Steven Vincent]

I'm confident it's a buying opp on a pullback. But will have to look for levels of support below. Hopefully we don't spike too high so that it forces an entry far from support. I am planning on buying for long term investment. PBW may be a good vehicle for green tech.

I can't wait to see the look on my gold bug/dollar bear friend's faces tonight when I tell them I am bullish on the USD and think that gold and silver might possibly CRASH. They are going to be shocked. I am going to be hedging my position on any sign of weakness.

[Chris Outwater]

Yes, this potential turn on Wed. is hard to explain. Yet, that is what makes it so believable for me. There is a bit too much euphoria out there. If we are right, 1050 ish on the SP looks very attainable before Wed. Fed meeting. Of course, markets could go higher, but I will be watching the vol as we push higher. If vol drops then I will be ready to pull back my horns and even growl like a Bear by Wed.

[Steven Vincent]

I do think that we need to see RSI readings of better than 80 and a VIX reading below 20 before there will be any significant pullback. Late comers need to desperately pile on sucking in the novices and the momentum players and forcing the last of the bears out. THEN we will get a healthy selloff and a buying opportunity. This could possibly all play out early this coming week. I don't see euphoria at all. I see continued worrying and skepticism and questioning. We need a blowoff top that will trick the bears into thinking that the top is in so they will committ to the short side again...and get slaughtered one more time.

Don't reccomend trying to get too bearish...rather waiting patiently for that buying opp!