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This pattern gives me a target of 1050-1000 for S&P500, I'm a contrarian analyst; everybody is bearish therefore I go against the crowd. I think we are in bottoming process but I'm willing to change my mind if facts changes. I would stay bullish as long as 50% Retracement level holds. Pay attention to 50% Retracement (see the chart, red line) 1126-1120 it will be a very important support level. If we stay above it we have a chance to move higher.
On treasuries, unless market tells me that after spending over 3 trillion dollar on TARP (Troubled Asset Relief Program), PPIP(Public-Private Investment Program ), TALF (Term Asset-Backed Securities Loan Facility ), Economic Stimulus Act of 2008, QE1, Cash For Clunkers, Homebuyer Tax Credit, QE2 and Operation Twist, our economy is as uncertain as 2008, I would say there is not any justification behind buying Treasury bonds. I think investors who bought T-bond made a big mistake and they are late in party. I went short TLT (iShares Barclays 20+ Year Treasury Bond) at $123. I was looking to short treasury bonds for a while my target for TLT is $112 I will cover my shorts if TLT hits $112. I can't believe TLT reached the 2008 high! Treasuries are the most overblown asset class. Last week "TLT" reached the 2008 high, but it failed to stay above it, from technical point of view it is very bearish. To me last week move was short covering by treasuries bears who ran for the hills. Question is are we in the same position we where in 2008, is there any justification for these moves? Please see the chart it would worth a thousand words.
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