This S&P Area is Important
Market technicians are rightly very beared up at this juncture of the market as a case can be made for much lower stock prices. On the otherhand this is a market driven by a few, the public is watching, and the few are the big money funny money crowd.
As such at the moment I believe a contrarian long stock / short gold position will work in this environment. We increased out total portfolio leverage ratio to 1.35 on Wednesday and are long stocks / short gold on a 1 to 1 ratio. Our average buy of the S&P was 1172 for the week so we are under water a bit this morning on the opening.
More broadly the price distribution pattern is still our working model. Ironically the recent market action in stocks, if an immediate crash is avoided, has the potential to blow the market briefly out the top of the price distribution channel with 1420 on the S&P by the end of the first Quarter 2012 a possibility.