Talk about a successful test for SPY. It almost ran all the way up to the highs from two weeks ago. I am not sure if Thursday PM/Friday softness was some profit taking, or worry about comments Bernanke made. As far as I am concerned if the stochastics are pointing up and we are over the 20 on the hourly, shorting is a fools game.
What is interesting though is we have EVERYBODY waiting for the May crash, Bernanke shovelling in money, the euro forming a right shoulder, and the Yen showing no signs of abating. Talk about cross currents. I also read that the Fed and the BOJ are creating much more money than the local Treasury markets need, and I think that is one reason we see the IEF continue to rise with the broad market, and European debt markets getting a bid.
I think the G-20 blessed Japan's moves is the understanding that they will buy up euro debt and keep the game going a while longer. It is difficult to see a market collapse unless they lose control over the debt or commodity markets, or Bernanke seeing how much extra currency being created feels like he can create a narrative of an improving economy and say he will dial back a bit on purchases of Treasuries next week.
This move still has one more month, and another 5 to 7% to match the biggest run on record, and Bernanke is not giving us many choices other than stocks to play with.
For the week ahead, I am in cash as of Friday close. People who follow my signals had a great week. We shorted DUST, and it dropped $30, and we rode SLW, SAND, SWC and DDD long. We even made money long VXX and XIV.
I am uncertain as to direction and there is a lot of news and expectations next week. I'll probably just play volatility and watch gold, silver, and GDX for some scalps with SAND, SLW, and NUGT or DUST. Cash is a position, even for those of us addicted to the markets. LOL.
I am going to do some basic and advance charting classes in May, if interested you can register here.
Here are a few charts.