The market is playing out one of 2 scenarios. A deep cyclical bull market correction down to 1020-1040 area, or a mini bear market that takes the market to 950. If we close above 1115 in the next 2 weeks, that will invalidate the bear case. If we fail to close above 1100 in the next 2 weeks, that will invalidate the bull case. If we have a close between 1100-1115 in the next 2 weeks, but not above 1115, it is 50-50 odds of a bull/bear case.
The lack of investor interest and bad fundamentals will make it hard to thrust higher like in February. Unlike February, the credit markets are telling a bearish story. However, bear markets are usually bred from a long period of complacency, and that is not the case for the rally from March 2009 to April 2010. So I am leaning towards the bullish projection.
Bull Case
Bear Case
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Tradeyourwayout.com uses the Elliot Wave theory to forecast a rally that'll take the SPX to 1300. Then it'll dump. Also, Larry Kudlow recommended selling into the rally so the capital gains will be taxed in 2010 instead of 2011, where taxes will be higher. Kudlow did not give a top, and he shouldn't.
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