Markets overall had a bullish week, but very choppy up and down.

If you remember I called for a “bounce” from 1358 ,, with a potential target of 1390-1400 of the bounce. We got there and a little further up and I fully expect that the bounce is done before we take another major sell off coming to SPX 1330 and then 1290 which is the topping head and shoulders pattern target.

The target on VIX is 28-30 based on the inverted head and shoulders pattern , so expecting the VIX to rise , with potentially USD.

1. VIX hit support trendline from the lows on Thursday and Friday ,, setting in the right shoulder in the inverted hs pattern ,, targets 28-30

2. USD hitting LONG TERM support trendline from September ,, if true could see a nice rally from current levels with the euro going down to 1.25 EUR/USD.

3. SPX and Dow Jones both forming topping head and shoulders patterns, you can also say that we have a broadening formation on SPX if you look at the 30min chart ,, and a rising bearish wedge over the past days.

I still think markets topped out in March , both US and the EU markets all been making major tops in March ,, which is a very good sign and therefore still believe this is the beginning of the bear market and the rally from 2009 lows to 2012 highs is done. Looking on NYA we have a very nasty and bearish topping head and shoulders pattern , which targets March lows 2009 ,, 4000. So I fully expect the closer we come to the summer months this year ,, the more likely we could see a potential crash here in 2012.

So watch out ,, May is usually also a bearish month by statistics , so dont expect much more rally from here as we go into June/July where I expect hysteria and panic in the markets ,, VIX could see 50+ at the time.

Conclusion: Congrats if you played the bounce as we did from 1358 ,, we however got in a little too early at 1389 as we thought the bounce were done ,, but it had some more breath to 1400 and a little bit above. The target I had for the bounce were 1390-1400 so pretty close ,, indeed if we start to sell off here. I’m expecting the next short term targets to be 1330 and then 1290 where we could see another bounce before a potential crash coming in June/July.

See you all in chat room on Monday 🙂 and enjoy the rest of weekend.