Protesters arrested in anti-Wall Street rally

T-bonds are overstretched . You are too late, party is going to end soon!

S&P is in a classic down trend, it formed a bear flag witch is super  bearish. Please see my post for more info: http://the-us-microeconomics.blogspot.com/2011/09/channel-got-violated-know-what.html

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.

Channel got violated, now what?

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.

Is S&P500 forming a bear flag?

  

 S&P500 has been moving in a narrow channel. This channel could be the missing piece of the puzzle. In my last post I talked bout possible formation of a massive bear flag. Bear flags are very bearish formation. As you see in the chart above the pink channel could be a bear flag. As long as S&P500 stays in pink channel we are going to be just fine, but if this channel get violated S&P500 should tank to 1050-1000. At this point I give 20%chance to violation of channel.

   On the chart I point a down trend channel in blue color. As you see in the chart in last couple days there was 3 failed attempts to break out of the down trend channel, but every time it was un successful. You need to pay attention to 1175 as the most important support level. If S&P500 violates 1175 it would be very bearish. I believe we are in process to form a bottom, but due to European crisis. I’m not going to trust the market. I don’t have any long positions. I’m 100% cash. I don’t want to risk my money. I let others pick the bottom.

    On the up side 1200 would be the psychological resistance but the real resistance will be 1228 level. Next 2 days will be very choppy. Let’s see what is going to play out by next Tuesday.

Quick update on market and bear flag formation in S&P500

Market has become overbought. As far as I'm concerned S&P500 still is in the bear market territory. Therefore I had to reduce my risk. I sold most of my long positions yesterday. I made a nice profit in 3 weeks I could not let it go. I'm looking for +2% pull back soon. S&P500 has formed a bear flag(see the chart in pink). At this point I would give 10% chance that bear flag formation come to play, but we must be open to any scenarios. If S&P500 violates 1100 level, S&P500 would tank to 1020-1000.

I think there is at least 70% chance we get a pull back to 1200-1170 support levels then big institutions should jump back in and squeeze the market higher. Please note 1250 will be a major resistance in coming weeks. If S&P500 gets above 1250 it would be the clear signal for a nice bull run. lets see what is going to play out!

1100 or 1040 is the next support levels for S&P500

It was a surprised to me and many other analysts when we heard Standard & Poor's downgraded the U.S. sovereign debt rating to " AA+" after market closed on Friday August 5Th. I was looking to downgrade sometimes in September but they jumped the gun! they didn't give any chance to the super committee to come with their plan. S&P had threatened if republicans and democrats fail to come up with 4 trillion cuts they are going to downgrade the U.S. credit rating. China's Dagong Global Credit Rating the biggest Chinese rating agency had downgraded U.S. several times in the past. The latest assault of the U.S. credit debt rating was on August 3rd 2011 from "A+" to "A" with a negative outlook. The only positive point is that Moody's and Fitch did not downgrade us yet!

If you did not go short you missed the boat. I'm getting ready to cover my shorts and get ready for possible bounce. S&P500 could get a bounced from 1100 or 1040. What you should pay attention in coming weeks would be 1200-1211 resistance levels. If S&P500 fails to get above 1200 I will add to my short positions. As you see in the chart above 1200-1211 coincide with 20 months moving averages (see the chart green lines) as you see in the chart S&P500 clearly broke the uptrend channel. It also violated the 20 SMA in the monthly time frame. Similar action in 2008 resulted a bear market. I also may play the long side if we get the dead cat bounce from 1100 or 1040. This is base on similar action was taken in 2008 after initial channel violation. Please note that S&P500 could spend the next couple months in a range 1040 to 1200 levels, which would be very bearish.

S&P500 broke the up-trend channel, is it a fake out?

I was looking for a bounce, when S&P500 reaches the lower side of the up-trend channel(see the chart above in gray), but instead big institutions decided to sell! I bought some shares yesterday near close at 1254. We will see if I get it right. I would get out if S&P500 violates 1246 support level(see the chart in red) .

Bullish scenario: There is a good chance that this move was a fake out, just to shake the weak hands before sending the market higher. If S&P500 fails to get back into the up-trend channel it would be signal of starting a new bear market. That this point I would give the benefit of the doubt to bulls, but if S&P500 fails to get above 1340 by third quarter it means good days are over and we are back to the bear market.

Bearish scenario: If S&P500 violates the 1246 support level there won't be any supports until it hits the 1200-1188 level. In this case we could get a "Dead cat bounce" from 1200 or 1188 which should ended somewhere near 1246-1260. If S&P500 fails to get back above 1246, I would consider putting my bull mask away and jump to the bear wagon. At this point it's too risky to go short, I would wait to see how big institutions are going to react to in coming "Dead cat bounce". If they managed to squeeze the shorts and send S&P500 above 1260 you can go long ,but if S&P500 rallies up to 1260 and fails to stay above it, I'll become the big bad bear once again,and will short any rallies.

Get Ready For S&P500 Relief Rally!

I’m getting tired of foolish republican political games, they are playing with fire and it’s not even funny. They are going to wait up to the last second before come to some sort of agreement to raise the U.S. debt ceiling. Their tiny brains can’t understand the destructive magnitude of shock waves which could cause by the U.S. debt down grade by one or a couple the rating agencies could have on the global financial market. I can’t believe a dumb and dumber are running my country! John Boehner’s speech disgusted me! I turned off the TV. I’m a political junky. I didn’t like Bush, but I can’t call a time that I turned off the TV while he was giving a speech. Republicans talk like they played no role this 14.3 trillion dollar mess!
Who did borrow money from China to go to war with Iraq and Afghanistan? Who did kept the interest rate too low for too long? Who did fail to regulate the Wall Street from gambling with housing Market?

Enough about politics! lets focus on stock market. I think the sell off is overdone and we are close to get a relief rally. We should have maximum of one or two days left from sell off and we should get a short squeeze with in next 2 trading days. Therefore I’m going to press "the buy key" soon. S&P500 should get a bounce from 1296-1290 if these levels fail to hold the major support will be 1284 or 1276. In the chart above I pointed the major uptrend channel which started in march 2009. As long as S&P500 stays in this channel bulls have the upper-hand. The last line of defense for bulls would be 1260. Let’s hope S&P500 would not violate 1260, if it dose we should witness big sell-off in coming days. If 1260 fails next support will be 1246. and if 1246 brakes there is no support until S&P500 hit 1200-1188.

S1: 1296
S2:1276
S3:1260
S4:1246 (MAJOR SUPPORT)
S5:1200-1188 (MAJOR SUPPORT)

S&P500 Up-trend Channel Has Held

On May 5th article I posted a chart click here; that I pointed 3 scenarios. So far my bearish scenarios has play out. What I like to see at this point is a strong short squeeze that ignite a strong rally. so far all we got was organized sell off. S&P500 hit the lower side of up trend channel(see the chart in yellow). Since August of 2010 S&P500 has hit it 3 times. As long as S&P500 would not violate this channel, bulls have the upper hands. If S&P500 stays below this channel for a couple days it means S&P500 is headed for 1274-1260 in coming weeks.

In the last 4 weeks S&P500 has moved in a narrow channel(see the chart in blue). this channel could interpret as bull flag. This is a very bullish formation, but there is one problem. Bull flags usually last 3 weeks. It means if we close this week negative, bulls will be in trouble.
bull flags usually give us 55% possibility of break to the upside. We shall wait to see what is going to play out.

Related topics:
S&P500 technical analysis chart May 5, 2011:

Some Thought on QE3, Fed Funds Rate and European Crisis

I don't care about chatter in CNBC and Bloomberg on doomsday scenarios. Fed is not going to announce QE3 anytime soon. Bernanke is going to play safe and announce that they are going to hold to their treasury purchases for foreseeable future. As I explained in my article on Option ARMs, the U.S. housing market can't stand any outside pressure. Unfortunately it is going to experience the second waive of foreclosures by August 2011. Any increase in interest rates would be suicidal for fragile housing market. therefore Bernanke is going to keep the Fed Funds Rate at 0.25% until late spring of 2012.

If last year someone would tell me an European country is going to pay +25% interest to borrow money for the next 2 years. I would fall of chair, but if you live long enough you would see that anything is possible. Greece 2 year government bonds yield hit +25% a couple days ago; yes! it yields more than junk bonds. European union members have to get their act together and do something about Greece, Portugal and Ireland. What makes me worry the most is Spain situation. Spain 10 year government bond yield hit 5.596% recently. If it breaks above 5.90% it would be very problematic.

As you should know by now, I'm a bear but I'm going to put on my bull mask ! I think big institutions are going to squeeze the shorts. I think the most we could go lower would be 1313 level in S&P500. obviously in past 3 weeks there are some damage done to the rally but I'm going to stick to my gun, "S&P500 is going to hit 1430 this year" we shall see what is going to play out.

1343 support level is do or die for S&P500

S&P500 technical analysis chart:

1343 is the major support level for S&P500 that many financial analysts including me are going to pay attention on Thursday. I'm in the camp that 1340-1343 support level is going to hold. I'm going to wear my bull mask as long as S&P500 stays above 1340.

On the other hand if S&P500 violates 1340 and tanks below it for 2 or 3 days I would say bulls are in trouble, and there is more to go. If 1340 fails to hold next reasonable support levels would be 1335 and 1300. But if we get a fake move below 1340 for day or two then big institutions jump back and send the market above 1340 there is a good chance shorts get squeezed and causes S&P500 to rally hard. my bullish target for this year is 1430. let's see if we can make it!

S1: 1343

S2: 1335

S3: 1300

Get ready for short squeeze, S&P500 1430 is just around the corner

OK! bears have enjoined 4 days pull back, now is the time to squeeze the shorts. I'm looking to a strong short squeeze in coming days.
As long as S&P500 stays above 1285 bulls have the upper hands. S&P500 has formed an inverted head and shoulders. If big institutions send the S&P500 above 1340 I would expect a strong rally to 1430 in coming weeks. Please note if S&P500 violates the orange channel bulls are in big trouble. 1285 support level is do or die for S&P500. Lets see what is going to play out.

Tokyo Electric Power Company continues to remove water from reactors

NHK (Japan Broadcasting Corporation): Tokyo Electric Power Company continues to seek ways to drain contaminated water from the quake-battered Fukushima Daiichi nuclear plant where 3 workers were exposed to high levels of radiation.

The incident took place in the basement of the turbine building connected to the Number 3 reactor on Thursday. Three workers installing power cables waded into water that had 10,000 times the usual level of radiation found in a reactor.

After the incident, TEPCO found that not only the Number 3 turbine building, but also the Number 1 and Number 2 turbine buildings have highly irradiated water in their basements.

The company says it will pump the water from the basements into the turbine condensers for storage.

TEPCO plans to drain the basement of the Number 2 reactor turbine building on Sunday, and is studying ways to drain the basement of the Number 3 turbine building.

Meanwhile at the troubled Fukushima Daiichi plant, workers continue to pump fresh water instead of seawater into the Number 1 through 4 reactors to flush out salt.

Support level has held, let's see if we get the short squeeze

I was looking for a pull back to 1260, but Japanese nuclear crisis caused S&P500 to tank to 1250. I’m out of my shorts and I have been pressing "buy" since Thursday. I think if the 2 remaining reactors would not blow up 1250 would be the low for weeks to come. The Japanese crisis priced in, and we should get a "Dead Cat Bounce". At this point I won’ trust the up side moves until we get a clear view of what is really happening in Fukushima Dai-Ichi power plant.

“The nuclear cores inside the reactors are usually covered in water, but the top halves of the cores in reactors 1, 2 and 3 were exposed to air for at least several days, according to reports from the IAEA (International Atomic Energy Agency). Even if those cores are resubmerged, they may have experienced permanent damage that would make them more difficult to keep cool, Lyman said.

For instance, he said, if the exposed portions of the fuel rods have swelled due to heat, the gaps between them may now be too small to pass enough water to cool them.

In addition, when the zirconium cladding surrounding the cores was exposed to air, it may have oxidized and become so brittle that radioactive fuel particles could have escaped through cracks. If enough of the escaped fuel has collected at the bottom of the reactor vessel, it could become hot enough to melt through the steel container and escape into the environment, Lyman said. Even if the steel was not breached, the collection of fuel at the bottom of the container would also make it more difficult to cool.
"These cores may not be as easily cooled as if they were undamaged," Lyman said.
Workmen have been spraying all three with seawater for several days in an attempt to keep temperatures down, but the water has combined with the steam and radioactivity to make it difficult for workmen who are attempting to reconnect power.
Had there been no intervention at the stricken power plant, the nuclear fuel would have completely melted within six hours, Lyman said. That would have formed a "hot pool" of fuel that would have melted through the bottom of its stainless steel shell within two hours, he said. But neither of those scenarios has come to pass.

"If the seawater pumping had not been effective, this would have ended days ago," Lyman said. But as long as workers can continue to feed water into the plant, the situation could be stabilized indefinitely, he said.” *

I think the move below 1300 is a bear trap, If I get it right we should experience a strong rally in coming days. I’m long but I won’t feel comfortable until S&P500 gets above 1320.
Pay attention to 1273-1276 as an important support level. If S&P500 close below it I would get out my long positions. If S&P500 stays above 1276 we should get a big short squeeze to 1308. Lets see what is going to play out.

* LA Times: http://www.latimes.com/news/science/la-sci--japan-reactor-damage-20110320,0,7441237.story?page=2

Get ready for S&P500 big move !

S&P500 has sending mix signals. It has formed pennant ,which from technical stand point is very bullish, but in May 2010 same set up end up badly. Pennant formation give us the target of 1370 . As I mentioned before pay close attention to 1333 for conformed the bullish set up. If S&P500 tanks below 1304 for two days or more it should fell to 1280-1260. As long as S&P stays in yellow channel bulls have the upper hand. I'm a bull as long as the yellow channel is intact. If S&P drops below 1304 I will go short. Big institution may set up a "bear trap". It means we could get a fake out below 1300 support level for a day or two to trap average investors, then on Monday or Tuesday S&P500 could gap open higher and caused a big short squeeze. Lets see how it is going to play out?

S&P500 must get above 1333 soon!

In the past 2 weeks S&P500 has formed a bullish pennant. I'm looking for violent moves in coming days. We spend enough time to consolidate, now is the time to get the big move. If big institutions want to squeeze the shorts they must send the S&P above 1333. If S&P gets above 1333 to me it would be the conformation of the bullish set up, but if S&P500 closes below 1319 it would be very bearish. In the case of up trend channel violation you should go to the sideline. Note as long as S&P stays in yellow channel bulls have the upper hand. I'm a bull as long as the yellow channel is intact. If S&P drops below 1304 I will go short.

S&P500 uptrend channel is still intact

The risk appetite is decreasing the London Interbank Offered Rate (LIBOR) is on the rise,and the Spanish-German 10-year govt bond yield spread hit the 218 bps and Irish-German 10 Year Spread reached 618 bps which show no improvement in European crisis.

In last 6 trading days we witness big volume in down days that from technical aspect it is not a good signal, but I will give the pattern higher priority in my analysis. The up-trend channel still is intact therefore bulls did not lose the fight yet. Pay attention to possible violation of the yellow channel. If bulls fail to keep the S&P500 above 1294.26 they will be in trouble. I got out my long positions at 1322. I think the sell off is overdone, but big institution could send the market much lower. I would consider going short if S&P500 violates 1294 level, every body is bearish therefore I don't mind to go against the crowd and have some long trades; obviously if 1294 level would not hold I will get out of any long positions.

10% correction! not yet.

S&P500 technical analysis chart:

As you see in the chart above S&P500 has been moving in a narrow uptrend channel (see the chart in yellow). As long as S&P500 stays in this channel bulls should have the upper hand. I covered my shorts at 1305. I'm betting on market to bounce from 1300 support level.

As you know I'm a contrarian analyst therefore despite the moaning and crying of talking heads on CNBC I'm going against the crowd. I think market is not ready for 10% correction yet. We are in the process to form a topping formation, I'd like to see a lower high before we start the next leg down. Therefore there is no point to panic. I think the potential for a strong short-squeeze is too great therefore it's too risky to go short until S&P500 makes a lower high or violates one of the major support levels. If you don't feel comfortable to be in market you should go to side line for a while until the dust settles. Meanwhile pay attention to 1300 as important support level, if S&P500 breaks it, the next logical support would be 1286. Please note we could get a fake out for a day or two to trap the weak hands before we head the other direction. If bid institutions send the market higher and S&P500 closes above 1315 we are going to get a big short-squeeze.

Housing market here we go again!

Case-Shiller Home Price index declined, this should not be shocking to anyone. According to Case-Shiller data which shows home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index declined by 3.9% during the fourth quarter of 2010. The National Index is down 4.1% versus the fourth quarter of 2009. There is a direct coordination between household income/job market and housing value. I believe we did not only have housing bubble, actually we had job bubble too. As Mohamed El-Erian, CEO and co-chief investment officer of Pimco, says, "We need to accept the New Normal,". Many jobs were created due to spike in home prices and they are not coming back any time soon.

Allen Greenspan in an television interview admitted that he knew new a head of time that house prices is going to burst but he did not want to be the Fed chairman that things falling apart under his supervision. His economics policy to keep interest rate low fueled the housing market! And Ben Bernake followed his foot steps for a while. By the time Bernake started to raise rate it was too late.

The reality is that the home foreclosure rate did not improved and if we see some improvement in some states like Florida it is due to clogged up courts that are not able to address the flood of foreclosures on time. I wrote an article about Option ARM's tsunami last year. I'm looking for another leg down in the U.S. housing market by summer. Option ARMs (Adjustable-rate mortgage) is one of the most popular mortgages in the past decade, it enables the borrower to select from various loan payment options. The interest rate on the note is periodically adjusted based on a variety of indices. Among the most common indices are the London Interbank Offered Rate (LIBOR), the rates on 1-year constant-maturity Treasury (CMT) securities, and the Cost of Funds Index (COFI). These mortgages are typically structured with a low introductory interest rate or teaser rate of 1% which usually resets with in 5 years to a much higher rates. There are as many as four major types of payment options:

1)A fully amortizing 30-year payment.
2)A fully amortizing 15-year payment.
3)An interest-only payment.
4)A minimum payment option that adjusts after the first 12 months.

The option ARM loan program was one of the most popular mortgage choices for borrowers in the United States in the last few years due to its forgiving payment flexibility. This same loan originally was designed for high quality credit borrowers who invest in housing market and wanted to take advantage of payment flexibility, and low payments, but Wall Street abused this financial instrument and start to use it broadly for anyone who could find. Payment flexibility has also made it one of the most scrutinized loan programs in history because of its sometimes misleading ability to qualify borrowers for a home they truly can’t afford. Typical option arm programs do not have any caps aside from the lifetime cap of 9.95%, though the minimum payment generally increases 7.5% each year until it is no longer an available option. Problem started when mom and pop start to get in the housing business and financial industry start to promote Option ARM's as a common practice. The way mortgage brokers trap their preys was by telling them that they could flip the house before the teaser rate ended. Therefore many home buyers bought many homes that they could not afford. They could afford to pay the 1-2% teaser rate but when the promotional period ends they are going to face 300-600% increase in their mortgage, therefore they have to sell. Every body knows what happened to home prices. Thus they cannot refinance because the value of their house is significantly lower therefore they have to short sell or face foreclosures. The sad thing is that many home buyers who can afford to pay their mortgages use “strategic default” and walk away from their investments.
In summer of 2006 a friend of mine who is a successful mortgage broker gave me a heads up about the abuse in mortgage industry and lack of integrity between mortgage brokers. He complained that his boss put pressure on them to pitch Option ARM's to their clients. This was not an isolated incidence it was common practice nationwide.

You may want to know how big is the next wave of foreclosures? what you should recognize is that prime mortgages on average are significantly larger than sub-prime, and the larger the house and mortgage, means the bigger the loss. With over 50% of mortgages failing coming from prime loans, bigger loan losses lie ahead. The total losses to come is anyone’s guess, but the $11 trillion in outstanding home mortgages could easily produce over $2 trillion in defaulted mortgages!!

The light pink bars in the chart below shows when the tsunami is going to hit us. Please note the eye of the storm will be hit us by summer of 2011.

The Importance Of 88.81 For iShares Barclays 20+ Yr Treasury Bond

iShares Barclays 20+ Yr Treasury Bond technical analysis chart:


20 year treasury bond hit the diagonal support line(see the chart in pink). This line has potential to play an important role in coming days. $88.80 will be a significant level for TLT in coming days. Please note we could get a fake move for a day or two but I'm looking for a big bounce in coming days. If treasury bears push the TLT below $88.81 for a couple days it will tank to $82.00, at this point it is very unlikely but I like to point the possibility.

S1: $88.81(major)
S2: $88.00
S3:$82.00 (major)

S&P500 Possible Moves In Feburay 2011

S&P500 technical analysis chart:
S&P500 hit the 1300 resistance and we got the pull back that I was looking for. I think we are going to get the minimum of 3-5% correction in near future. We did not violate the yellow channel yet, therefore bulls have the upper hands. I would like to see what big institutions are going to do when S&P500 reaches the lower side the yellow channel. If S&P500 tanks below 1247 picture will become ugly.
In the short term time frame S&P500 is oversold therefore I'm looking for a slightly up move to 1283-1290 before we head lower. I think 1283-1290 would be a reasonable level for bears who missed the move to jump on the bandwagon. Please note if S&P500 gets above 1290 it could rally to 1313, if it stays above 1290 for a couple days you have no business to stay short.

Supports
S1:1260
S2:1247
S3:1228-1220 (Major)

Resistances:
R1:1280-1283
R2:1290
R3:1300-1313 (Major)

Pay attention to 1300-1313 levels in S&P500

S&P500 technical analysis chart:

If S&P500 violates the pink channel it will drop to retest the yellow channel.I'm looking to a pull back to 1260 with in next 2 weeks. As long as S&P500 stays in yellow channel bulls have the upper hand. Please note 1300-1313 is the major resistance in coming weeks, bears are not going to miss this opportunity to go short. We are going to witness a big drop when S&P500 reaches 1300. I would like to see if there are any buyers when we tank to 1260?

watch out! I have noticed un usual activities in equity markets

In the past 3 days I have noticed un usual activities at institutional level. To me it is the warning signal, such actions in the past end up badly. I'm looking for a big move in coming days. S&P500 is over extended, pay attention to 1300-1313 as problem area. If we get a pull back 1260 and 1236 would be possible support levels. If S&P500 tanks below 1236 bulls are in trouble.

European crisis getting worse day by day. The 10 year Greece government bond yields 12.64% and Portugal 10 year government bond yields 7.113% in last couple days they have moved significantly higher.

Ireland 10 Year Government Bond Yield Chart:


Spain makes me nervous the German-Spanish 10 year spread is on the rise. If German-Spanish 10 year spread get above 2.8 basis points you need to reduce your risk and get out your risky assets.

German-Spanish 10 Year Spread Chart:

Important technical levels in January 2011 for S&P500

The real game will start today. Big guys are back from vacations; market should become volatile soon. By second weeks of January I should have a vision which way market is headed.
Meanwhile pay attention to ~1260 and 1300 as problem areas. S&P500 has moved sideways for many days it's about time we get some action. If S&P500 stays above 1260; it would have the potential to shoot for 1300 level. If big institutions start to sell, I would look for 1232.56 as the first line of defence. If it would not holds S&P500 would tank to 1245 then 1220.
Please note if S&P500 stays below 1228 for a couple days it would be very bearish.