1. HOW LOW IS LOW?

Once the SPX broke 1140 support, the December year close of 1115 was the obvious target that we wrote about last week.  On Thursday, markets surprisingly reached our projected P2 DJIA targets 9868 vs. actual 9872, albeit sooner than forecasted.
Friday May 7 we issued the following alert to all WSNW subscribers: 

WSNW ALERT MAY 7, 2010 10.40 am Short term traders should be locking in profits now.
However while markets should be lower, intermediate term traders should also be ready to take or lock in profits. And then reshort as markets warrant (higher e.g. Dow 10600-10800, or lower). 
Investors: No point in buying THIS market as we expect lower over the next few months. 
NOTE; WE ARE TESTING THE OBVIOUS 2009 CLOSE NUMBERS [DJIA 10428 SPX 1115 & NASDAQ 2269].
WHILE THEY SHOULD BE BROKEN (GO LOWER), THERE IS PLENTY OF PROFIT AND SOME SHOULD BE TAKEN OR LOCKED IN.

5/07 Marker           DJIA   10344  SPX  1106  NASDAQ 2246
5/07 LOW:            DJIA   10241  SPX  1094  NASDAQ 2228
5/07 EOD:            DJIA  10380  SPX  1107  NASDAQ 2265 

Some bulls will already feel justified in buying next week despite lingering issues with Euroland, China, Volcanoes, Oil spills etc.
However, we maintain our bearish (aka "realistic") bias into the Summer. We expect to continue to reshort intraday and positionally as markets warrant more often than not.
We look first to the Spring 2010 lows of DJIA 9908, 2125 and SPX 1056. Thereafter looms the “ultimate bull nightmare aka a 20% bear market correction. This is possible by the Summer.  Whether we see a market this low or not, it remains a looming risk into the Fall.  Trade and invest accordingly. 

FASHION ALERT: Denim cutoff shorts are spring’s hot pants
“You can wear a good pair of cutoffs to the beach in the daytime and totally dress them up at night with heels or even a bodysuit,” says Michelle Siwy, creative director of Siwy Denim.
Note: Plaid shirts, flat boots and striped tops work best for daytime, while sky-high heels and loads of accessories — and lunges — work best for taking the look into the night.”
Market Translation:  Markets have been wildly bullish. If you wish to remain so, for the nighttime (bear markets) use covered calls or put options (high heels), lots of diversification (accessories) and think about India and Vietnam (lungis) :)
 

Next Issue:  The Jupiter-Saturn Opposition
 

 
KEY DATES:    MAY 14
DJIA:                S1 10450 S2 10250 S3 10000 R4 9868 R1 10500 R2 10600 R3 10800 R4 10888
SPX:                1115/1140 DUAL PIVOTS
NASDAQ:         2125 SUPPORT? 2325 PIVOT
JUNE GOLD     1200 PIVOT 1050 SUPPORT 1220-1240 RESISTANCE
JULY SILVER:   17.25 PIVOT
JUNE OIL:         76/81 DUAL PIVOTS
US$                  82/84 DUAL PIVOTS   

Market Marker Sentiment changes MAY 28.  
So Far: Modest Hope coupled with Realty (Disappointment).  Unlike previously, markets drop first, then usual bargain hunting rally ending slightly positive.
2009 CLOSE:           DJIA  10428 SPX  1115 & NASDAQ 2269
2008 CLOSE:           DJIA   8776, SPX   903 & NASDAQ 1577
2007 CLOSE:           DJIA 13264, SPX 1468 & NASDAQ 2655
2006 CLOSE:           DJIA 12463, SPX 1418 & NASDAQ 2415
2005 CLOSE:           DJIA 10717, SPX 1248 & NASDAQ 2205
DJIA:                       8 ~ FV 0 UV; 5 offer 4%+ Dividends 2 offer 5%+ Dividends.
US BANK FAILURES TO DATE: 68   
THINK TRADITIONAL SWISS AND PRESERVE CAPITAL: FOCUS ON PROTECTING AGAINST DOWNSIDE RISK. 

2.    2. Investors: No point in buying THIS market as we expect to see it lower over the next few months. 

Friday we were selling US Bonds.   We even suggested selling TIPS which reached above our 106.50 initial price target. However, TIPS (inflation) is something I would trading rebuy104.50 to 105, or simply not trade, but hold as a portfolio hedge. 

3. Gold should soon be ready for an astrologically assisted seasonal correction by the end of May. We also are near the top of our intermediate term trading range- 1220-1240.
Do the math.
 
Silver is less expensive relative to gold. We are in no rush to buy physical silver, although some silver stocks are beginning to look modestly attractive. 

4. “Volatility for sure will stay high and markets might tend lower today. Nevertheless, there could be trigger points like, e.g., joint statements by central banks incorporating some sort of quantitative easing again which should positively support markets, especially after the ECB has disappointed yesterday. Therefore I am reluctant to sell after the losses we have seen and would rather stay at the sidelines waiting for the mentioned signals.”
HW: GMTA. That is largely my strategy this coming week but I am also waiting for additional bearish signals as well. 

“The elements you have seen over the last few days have injected fear back into the equation.  People are looking for an excuse to go to the doors.”
Doug Roberts, chief investment strategist, Channel Capital Research
HW: As well they should. 

“The stock market is incredibly inexpensive. I don’t know how the bears can argue against how well corporations are doing.”
Kevin Rendino, manager, BlackRock
HW: Permabulls are by definition Permabulls. You said that BEFORE last week’s correction - Amazing. 

5. Using the panic button to your advantage

Why an Extended Bear Market Is Likely 

Bull Market Is Intact for Biggest U.S. Fund Managers as Valuations Improve 

6. READER: Your views if any on the Update - Gold, Crude Oil and Equities?
HW: Same: Overpriced, Overpriced and Overpriced! 

READER: Re: FRIDAY MAY 07 while MARKETS ARE STILL QUITE OVERPRICED 10.40 AM
Thanks for making sure that even SILVER subscribers get your trade recommendations.
HW: We make dozens of trade recommendations, but we did plan to give this second of three forecasted mini-corrections of 2010 to all subscribers.