Until such time as the hoped-for head & shoulders pattern on the S&P is rendered moot (which would take place if the S&P crossed above 862), I'm still working with that as the primary theme.
One item of interest to me is the EEM. It broke above the resistance line and – – importantly – – fell beneath again, and it is having trouble getting above it once more. This smells to me like a failed breakout.
I therefore am long the EEV, which is the ultrashort of the emerging markets index:
We've all been witness to the recent manipulation in the market, particularly from our good friends at GS. We need to mentally prepare ourselves for the worst-case scenario, which would be a push above 875, completing a pretty decent inverted H&S pattern with a measured target of 1065 (which is the projected high-water mark for 2009, in my opinion, although I'd prefer to wait until later this year!). I'm not seeing this is likely, but we need to keep potential disasters in mind and be prepared to act accordingly.
