The S&P closed today at 700 on the dot. We're at levels not seen since October 1996. In order to go long this market you have to wait until the market retests support successfully and sees higher lows. I'd also wait for the
^VIX (the market fear gauge) to implode. It recently broke out of a pennant formation and is currently testing resistance at 53. I feel like I have a couple blog posts talking about this. You have to keep your inverse index ETFs (
DXD,
SDS) hedged with some upside call protection until the trend reverses itself with conviction. If you're itching to be net long you have to wait until real market value is discovered. The market is still awaiting the fate of Bank of America, Citigroup and GM.
Below I posted linear and logarithmic charts of the S&P going back 30 years. The logarithmic chart evens out the percentage difference on the y-axis. The long term log chart is more frightening than the linear chart. The linear chart shows the trend line hitting today in the high 600s however the log chart goes into the 500s. Remember these are just lines but they do provide a historical look at supply/demand for the S&P. Also you can draw lines from different data points to provide a different perspective. Good luck.
S&P Logarithmic Chart (Bigcharts.com)
S&P Linear Chart (Bigcharts.com)
