The ‘jam job’ by the PPT in stocks at the close on Friday was designed to impress the Chinese and legitimize the government takeover of GM. We need to see how stocks finish today as there apears to be trouble brewing in the markets. If the S&P (SPX) closes below the 200-day exponential moving average at 943 (and dropping) on Tuesday, then closes below the 200-day simple moving average of 927 (and dropping) by the end of the week, then expect a great deal of trouble. If stocks continue to rally above these 200-day moving averages, then expect the SPX to move to 1,000 to 1,050 in coming weeks/months. These moving averages are vitally important in determining the direction of the market.
If this breakout is to be sustained, stocks need to stay above 93.22 for SPY from the May 8th high. In other words, any consolidation from here should be modest if a new up leg is beginning.
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