I think I'm going to alter my view as to what I think will happen to the market. While I think the short term lows are likely in, I won't say that we will make new highs for the year in the SPY. It's possible that we could make new highs (ie. we only hit the 200 DMA once during this bull run, and the recent correction could be just to shake out the weak hands). But what is also possible is a very bearish head and shoulders pattern as illustrated in the chart of the SPY above. We could also get the bearish head and shoulders pattern, and then fail the bearish pattern and make new highs for the year. Again anything is possible, and I will be lying if I said I knew what will happen. The point is that we must be flexible to what will possibly happen. I will say that the markets on the SPY could probably rally to 118 in the next couple of weeks, but then we have to re-evaluate what will happen later, but judging by the chart of oil, it's possible that we have already seen the highs for the SPY for the year.
Looking at the chart of oil (USO) it is really ugly. We have significant technical breakdown, and I no longer think that printing money will just inflate oil prices. The market obviously thinks something is really wrong with oil (and the markets), and have sold off oil accordingly. At this point in time, looking at the chart, any rally in oil will probably will probably lead to 38 on the USO and we will have significant resistance there. Again anything is possible, but oil is telling us that we have real troubles in the economy.
Lastly gold, looking at that chart it appears to be the only thing that is healthy these days. The bull for gold seems like it will continue. It will be a safe haven in market uncertainty like what we're experiencing now, and also good when governments around the world print money. Any violent dips in gold can likely be safely bought.
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