Thursday, May 21, After Market Close

We got a solid down day today (Thursday). After reading much analysis, the market will be on its way down shortly. The 30 and 15-min stochastics suggest the market should rise tomorrow, so this should be a good entry point to go short when the SPX hits 900 to 920. Tomorrow's, and maybe Monday's bounce should require three small waves beginning with an initial upleg, then a partial down leg, then the final upleg to 900-920 before the market begins it's big correction.

If by some chance the SPX breaks above 930.17, then all bets are off. This would signal a continuation of the March 6 rally, but I consider this highly unlikely. There's just too much bad news drip, drip, dripping out there every day... and with earnings announcment season pretty much nearing an end, there's not much left to keep the market in an upward trend.

Current predictions appear to suggest a correction to about 7500 for the DOW and 800-820 for the S&P.

There was a lot of chatter in the financial news media today with a veiled admittance by Geithner that the PPT spiked the recent rally to support banks for their stock offerings. Gosh, who would have guessed they would do something like that?

Appears we're also having problems on the US dollar and Treasury bond fronts. The dollar keeps plunging, which is not a good thing and there might not be a lot the Fed and Treasury can do about it - - except let the stock market fall. Also, word just came out some foreign central banks have been selling into the Treasury bond auctions with one bank selling a large position of 5-yr notes. Other offers too are coming in from Asian real money longs using higher coupons -- also looking to sell size without unduly upsetting the market; especially considering the illiquidity in off-the-run bids from the Street. This spells big trouble for the US dollar and the bond market. We could be seeing higher interest rates real soon and a potential financial panic not too far in the future. The Fed's have a big auction next week - - let's see what happens.

Could be the hedge funds might make a run on GOLD to drive up prices. Could be a risky move, but we might see $1,000+ gold prices soon unless the central banks bring it down like they did on Wednesday.