Is S&P 500 Ready To Hit Abby Cohen's 1250-1300 Target, 50 Month Moving Average? 10-40 Year Monthly Charts, $SPY $SPX, $VIX

The S&P 500 definitely pierced through the downtrend line which is bullish structurally if it can hold.  In the 10 Year S&P chart below, every time the S&P broke above or below the trend line it switched directions.  That's why I think this particular downtrend is so important.  It's currently in process of confirmation and needs to take out the highs from January (top of channel) to attempt a decent long to possibly the 50 month moving average or 1230.  Every time the S&P closed above or below the 50 month moving average the trend was confirmed for a few years. What's interesting is on the 40 year S&P chart (exhibit 2) the last time the index traded well below the 50 month moving average was in 1973 (before 2001 and 2008).  The MACD needs to close above zero which is currently at -32.4 on the monthly.

A few weeks ago Goldman strategist Abby Cohen said S&P fair value was between 1250-1300 [video] so that's another possible target.   If I attempted to pull the trigger to ride an upside breakout I'd buy some cheap puts for downside protection just in case there's a catalyst that fakes the break (which Marc Faber thinks could happen). The Volatility Index (VIX) is testing lows again, however if history repeats itself volatility (option or insurance premium bids) could rush into S&P index options and bring down the S&P or SPY, which would make your puts more valuable.  The same would hold true if I wanted to get short and hedge with calls if the S&P broke back below the ultimate downtrend and channel support.  It's all risk management.  Learn more about buying index puts to hedge at the Chicago Board of Options Exchange (CBOE.com).  It appears that crude oil, the S&P and gold are all testing major resistance levels (except gold which is minor resistance below the December 2009 peak).  I'll update tomorrow.  All eyes are on any sign of a double dip recession, the market will lead the data.  Watch out for catalizadores.

S&P 500 - 10 Year Chart [FreeStockCharts.com]

S&P 500 40 Year Chart (should say 50mma)

S&P 500 5 Year Chart

VIX (CBOE Market Volatility Index)

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