As you see in the chart above the pink channel got violated on heavy volume. This is what bears have been wishing for last couple weeks. There are 2 possibilities:
1) Bearish scenario: If S&P500 fails to get above 1180 with in next couple days it means we are headed for 1050-1000 level. Due what have has happened in last 2 days I will give 40% chance that S&P500 tanks to 1000 level.
2) Bullish scenario: if S&P500 could hold above 1100 support level it should rally to retest 1180 resistance level. If it could penetrate 1180, bears will rush to cover their shorts and bulls can sleep well. at this point I give 20% chance to such a rally.
Greece Two Year Government Bond Chart:
Greece financial situation is a big unknown for many but in the eyes of
professionals, it has improved compare with last week. Bond traders believe Greece default is eminent. Greece two year government bond yield has fallen sharply from its high, but it is far from normal levels. If Europeans succeed to manage a orderly Greece default, bulls could hope for a normalization of the market. Until then investors must be very cautious, because Greece default could have a ripple effects in world market witch will be bigger than Lehman Brothers bankruptcy. I'm a bear but after what I witnessed in 2008 and 2009, I have a hard time to go short. We don't trade in free market, and IMF or Fed interventions could easily shake the market. I sold my long positions when S&P500 was ~1220 and I have spent last couple days in the side line. Everybody is bearish therefore I will go the other way. I went long near the close. I hope my contrarian attitude would not cost me lots of money.
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