Commentary below from Mark Leibovit, TIMER DIGEST’s #1 Intermediate Market Timer for the 10-year period ending in 2007, the #2 Intermediate Market Timer for the 10-year period ending in 2009, AND the #3 Gold Timer for the Ten Year Period ending 12/31/10. Subscribe to the VRTrader Newsletter.

Options Expiration Should Help Provide A Lift – But There Could Be Some More Downside Volatility Ahead. Volume Should Guide Us!

Stocks – Bull – The S&P 500 rallied nearly 100 points from 1249 to 1339 between my predicted mid-March low (on March 16) and the April 8 high. Let’s turn Fibonacci. The Fibonacci sequence is named after Leonardo of Pisa, who was known as Fibonacci (a contraction of filius Bonacci, “son of Bonaccio”). Using .236, .382 and .618 we generate support in the S&P support levels of 1317, 1304 and 1284 (about 11,900 in the Dow Industrials). We touched 1309 yesterday, but, alas, this is Options Expiration week, so could easily bounce from here or, perhaps, have already seen the low. We took profits yesterday in our inverse S&P 500 ETF with that thought in mind, so let’s see if the market has any legs or falters again on the weight of the Japan story, the budget compromise, disappointing corporate earnings, or fear that QE2 won’t be followed by QE3.
My opinion is that Bernanke has no choice but invoke QE3, though it may not come right away. Too much is at risk if he doesn’t. His targeting a higher stock market won’t unfold, job creation could come to a grinding halt, the impact of a faltering Japanese economy could become contagious, and home prices will continue to erode. At the moment, my view is that we’re simply correcting the runup and not in the early stages of an extended bear move. That said, I am not long indexes until I see some Leibovit Positive Volume Reversals. Perhaps that will come from lower levels, so we have to be patient.

Gold – Bull – Yesterday I told you Spot Gold had risk back down to 1449 and we touched 1443.50 before bouncing back into the close. Silver, however, only managed to touch 39.72 versus potential down to 38.20-38.60. Like the equity market, I am awaiting the return of upside volume, but I also recognize that we’re in a super-bull market and dips could be minimal and we have to seize on any and all corrections as gifts

Bonds – Bearish – On the sidelines awaiting an opportunity to position on the short (inverse index) side.

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