06.14.2011 -- Risk on.

Well we got 1265 on an intra-day basis which was the very top of my target range. I expected more, but that may be all she wrote for awhile. We still have a small chance to turn back down as the S&P needs to clear 1295 to cement a ride well back into the 1300's.

I am still sidelined at the moment. If the S&P takes out 1295, I will be going long by way of shorting TZA.

I would not take a new position as of this moment.

I do think we have the beginnings of a trend change in place here. We are forming a top. Just remember a top took nearly a year to form before the 2008 sell off and the death cross (the 50dma crossing under the 200dma) confirmed it and that's when the real selling started.

We are months away from a potential death cross in the S&P or DOW. So we have some work to do. We are forming a top, but it will take time.

Here are some reasons I am pretty certain we are forming a top;

1) Selling is now long and orderly while the rallies/bounces are becoming violent and short.

2) The Financials look terrible and are acting how they did before the financial collapse in 08'.

3) Defensive area's like Consumer staples, Tabacco, Drugs and Utilities are leading.

4) Mutual funds are very low in cash, where's the money going to come from to continue to push this market to new highs?

5)The SOX is awful and is a leading indicator.

All that said, the S&P just needs a little more work higher and it will be able to rocket well into the 1300's.

Here are the charts for tonight;

S&P Daily, you can see here that it is just starting to roll off oversold on the daily, so there's definitely a lot of time for rallying. Potentially to new highs if we keep getting days like today;

S&P hourly, we are overbought on the hourly, so we might have a pause/pullback here after today's rally before continuing higher; 1295 is key and after a pause/pullback, the S&P MUST take out 1295 or it may head right back down;

The Russel daily looks like the S&P, just starting to swing up off oversold. The Russel just needs to breach the bottom of the bollingers around 76.60 on IWM to rocket higher;

So there you have it, in short, the market fell just short today of closing at levels that would confirm we are about to rocket higher. Since we are overbought on the hourly, I suspect we will pause and then take a shot at breaching those levels.

If we breach them, it will be risk on and rocket time. If we don't, it would mean we may collapse right back to where we started and lower.

S&P 1295 and IWM 79.60 Key levels.

GL

CJ