A Critical Juncture

The stock market is at a critical juncture, and we are relying here on technicals, not fundamentals. What we’ve seen occur this past two trading weeks is leading to an important movement to the market.

First, from KeyDates.com

“The S&P ran into resistance just below the February 18 high, traded sideways in early April, then fell into the April 18 turning date. The rally off the April 18 low has formed what appears to be an island reversal on the daily chart, with a gap down on Monday morning and a gap up this morning. If these gaps remain unfilled, we could have a very bullish situation, one that might surprise most traders. The next few days should tell us whether this analysis is correct. The S&P needs to exceed its February 18 high for the bulls to have the upper hand.

The April 26 turning date comes next week, one day prior to the next FOMC interest rate announcement, due on April 27. April 27 also marks the first time Fed Chairman Bernanke will hold a press conference following the FOMC meeting. We may see volatility during that timeframe”

And next, some commentary from chartists:

“-- NEW DOLLAR DOWNLEG MAY BE STARTING FROM BEARISH TRIANGLE

-- THAT BENEFITS STOCKS AS WELL AS COMMODITIES

-- THE FALLING DOLLAR ALSO GIVES AN ADDED BOOST TO FOREIGN SHARES”

The FOMC announcement Wednesday should be surrounded by volatility, as the market watches Bernanke and his responses to quantitative easing, what he says about Standard and Poor’s lowering our debt rating.

This week we’ve tried a new approach to our combined OEX/BCO commentary, with Floyd making a lengthy movie of his commentary for the week. The URL link for this movie, in its test phase, will be found in the BCO alert for Monday.

Here’s a summary of a few of Floyd’s number projections:

-We are now long the QQQ’s with options as it closed about 2350.

-We think the S&P has an upside price of target of 1349; if it breaks this it could gap up to 1400.

-This is all occurring because of the inverted head and shoulder formation we’ve been discussing.

-We agree with Charles Nenner Research that the NASDAQ looks strong, but be watchful at 2385, where we are now long on calls on the QQQ, which could lead to a NASDAQ close above 2450

-And what we’ll show you in our Dow projections is most key. If the market can hold up and close above 12,540 there is high potential of reaching 12,746 and then 12,880 before any correction.

We see a 70% potential of this happening and a 30% probability that the market will first correct again and take us back to 12,540 area.

Floyd has a rule of thumb to always sell for big profits too early and “to leave money on the table”.

We sold Gold at 1446 and Silver at 43.00, and it’s since continued its upward ride. We expected to see a mild correction before more upside, but we now hang our heads as gold and silver appear on a buy signal. Gold may hesitate 1540, and now that its’ hit the magic 1500 mark, a close below 1495 will be a warning signal.

We see more upside in Silver and would rather be long there first, as Gold cycles still show potential weakness until mid May. If we hit 1540 on gold we’ll be very bullish.

We have already begun to build small inventory in SLV and CEF.

By June Crude could reach 116. The market in oil, as with all commodities, is 50% outside of supply and demand and cause and effect, but all based on trader games and market makers leading markets. Obama may think he can stop this, but this is the natural law of option trading from beads 1000’s of years of years ago. Electronic manipulation now puts market makers fully in charge

In Blue Chip we are overinvested and plan no new buys this week. I’ll report on outstanding options and holdings that we are “watching” for our profits, or ready to reinvest again in

And yes, for those of you that ask:

1. We have fucked our sovereign debt, but so has every country in the world.

2. The house of cards of paper currency will somehow adjust to forgive debt, to practice a global valuation, and we see a return to the Gold standard.

False Facts: The Republicans lower debt and lower taxes. The Democrats raise debt and taxes. To yet again teach empirical facts please prove this to me as a summary of the past years.

All is never as it appears, but how we see it.

Be Well

Floyd at OEX and BCO

May 25^th, 2011