|My chart below shows SPX trend|
I threw up some lines as well on the S&P 500. You can see the uptrend line from August 2010, $1344 resistance level from February 2011 and an ascending channel which started in March 2011. The second chart shows a descending channel from the beginning of May. At this point there needs to be confirmation, but there is a possibility the market could breakdown here. So the S&P is at an inflection point and waiting for a downside catalyst for volatility. I remember on 4/28/2011 on CNBC Doug Kass said he was short SPDRS ($SPY) with out-of-the-money calls as a hedge. On May 9 he wrote an article titled "Kass: Sell The Rallies". Follow him on Twitter for updates. It probably makes sense to hedge either direction right now. Even SAC Capital's Steve Cohen said he sees a market pause. SAC Capital actively manages $14 billion. Also GMO's Jeremy Grantham said to lighten up on risk. The volatility index closed at 16.23 today (see $VIX vs. $SPX chart below). I'm going to watch currencies (EUR/USD, USDX and UUP) and commodities.
$SPX over 11 months (StockCharts.com)
$SPX 1-month 60 minute chart (StockCharts.com)
VIX (Volatility Index) vs. SPX (S&P 500)