SPY (S&P 500 ETF) is being squeezed inside a symmetrical triangle and could go ballistic at any moment (melt-up or down). It can't move sideways forever. For further upside, SPY must take out the 200 day moving average (red) and downtrend resistance level from April. Shorts would probably cover and intra-second high frequency trading perma-bull bots would feed on that. If that were the case, I'd probably look into a bull vertical spread of some sort. I just don't see that much upside, but keep in mind some strategists believe the S&P will hit 1,300 (130 SPY) by year end.
For the meltdown camp, if SPY's 50 day moving average gets taken out *again* I'd say it's a decent short (hedged with calls) to the uptrend line and, if all runs smoothly, 95 on SPY or 950 on the S&P. That level corresponds to the mid-2009 plateau and Blue Marble Research's SPX target by the end of 2010. The VIX (Volatility Index) is glued at the 200 day moving average (23). Also, the Investor Intelligence Bearish Percentage is diverging with the Volatility Index (read John Hussman's weekly comment from 9/6). See charts after the jump.
SPY (SPDRs S&P 500 ETF) - FreeStockCharts.com
VIX (CBOE Market Volatility Index) - FreeStockCharts.com