RF's S&P Call Revisted

Back in April I said that the S&P should develop a sawtooth pattern of consolidation and then we would go higher. So far objective #1 has been met and is highlighted above with the blue bars. Now comes the second objective, "the next leg higher". From the people I talked to, I would have there are about 6 bears out of every 10 traders and many believe that there will be no good news that will take us higher. I agree somewhat with that but I will monitor the RSI. The SPY must hold 50 on the RSI in order for the second objective to fulfill. Secondly, I believe my price target on the S&P will be done by Labor Day; however, it may come sooner, by the end of June if mutual funds are forced in to keep their jobs. I believe there are many mangers that are not putting money to work and are waiting on the last minute, in hopes of a pullback. If that doesn't happen, they will put BIG cash to work, which will drive stocks higher. As a trader, the new area everyone is looking at is the bond market. The 7 year auction went well Thursday, which drove us higher in the afternoon; however, as yields creep higher, the equity market could be in serious trouble. Rising yields are immient; however, the key remains how long this can be forestalled. Mortgage rates have gone up alot in the past few weeks from about 4.5% to now about 5.4% for a 30-year mortgage. I hear the top "bigboy" hedge fund for 1Q was up 12% which was a hell of a quarter. I believe some hedge funds went all in March and their years are made; however, mutual funds did not. If things get crazy again and fear comes back, I will cash out and go into a money market account because I am perserving my monster year. There are a lot of people that believe FAZ will go back to $20, SRS back to $50, and SDS back to $100...just look at some of the call buying. Regardless, the market rally will end soon but I still think we got legs.

RF S&P Position Disclosure: Long Sept $30 calls (cost $.85), Long SSO (cost $25.20), Short SSO June $24 Puts (hedged SSO bet)