Markets had this week a VERY interesting week as we got the WORST day for 2012 on Tuesday with markets going down -1.5%. I mentioned before that watch early March as a PIVOT week in markets ,, where NDX and other indexes actually formed the top so far. We broke down hard on Tuesday ,, however we used the last 3 days of the week getting back up to the same level as before the breakdown……

What I think is ,, that we broke some key trendlines and then we had a nice BACKTEST on those lines on Friday…. so we used 3 days to kiss the trendline goodbye ,, and I believe that 1378 could very well be the top for the next years on SPX.

All the charts I’m looking at suggest that:

1. NDX is possible making a 1-3 year major top if not much longer ,,, this is a MAJOR top imo and looks like in a monthly chart bear flag after dotcom bubble. We are right at trendline resistance on Nasdaq.

2. VXO looks extreme good ,, tested perfect a YEARLY trendline back in time perfectly ,,, its very oversold and the MACD is ticking higher every single week over the past 5-7 weeks,, imo I would give it 2 more weeks into late March and then I think VIX will explode to the upside in a major move higher.

3. Looking at SPX you can see that we broke down on Tuesday and used 3 days to backtest it ,, bearish backtest

4. Dow jones is imo forming a VERY clear topping head and shoulders pattern over the past weeks ,, targeting 12.400 on dow jones next 10 trading days….

5. NYA backtesting + extreme clear topping head and shoulders pattern on weekly ,, if the right shoulder is in ,, then a big major decline is coming from here.

6. In October 2011 I called the lows for 2011 which right now you can look back and see standed 100% correct ,, last summer I indicated that the second half of 2011 would be ugly and so far also got it based on the top hs pattern last summer. Look on site of recent calls for charts and comments. At the moment I said that a major top were due at new year ,, so over the past 2-3 months markets has not did much of anything ,, we have been grinding very slowly higher since then – but nothing major ,, we catched most of the rally up ,, the VIX already bottomed late January early February so fear in markets has also been increasing or moving sideways with markets grinding higher. So my view is 100% the same ,, its hard to predict an exact top ,, but right now it looks more and more like the “silent” period first months is over as we got the WORST day of the year in 2012 this week. This is imo just the start….

7. If I’m right and reading this right ,, this will be MORE ugly than 2011 crash ,, and even something like we saw in 2007-2009 period…. this could even be worse ,, I hate to call for a crash ,, but this time the chart patterns and everything is telling me ,, that a “Major” dump in the markets is coming,,, it can last 1 year from now but its going to get very ugly and so far I believe that SPX 1378 was THE top ,, its hard to call it as we are only a few points from it,, but all short term charts making bearish patterns too and all other charts also telling me that the rally is done from October 2011 lows.

8. UUP dollar got a WEEKLY chart buy signal confirmation this week,, the dollar holding strong and looks like cup and handle formation about to breakout higher ,, daily and weekly charts on dollar is on full buy signal,, I believe a major rally in USD is underway.

Conclusion: The conclusion is that all charts indicates that the rally from 2011 October is DONE here early March — and that we got the worst day of 2012 is a start ,, and then used 3 days to backtest the broken trendline is imo bearish. I believe SPX topped out at 1378 and this could be a 1-3 year top in markets. Remember I’m trying to catch the “bigger” moves in the markets ,, as I did from October 2011 lows.

For this coming week the charts indicate that we could roll over as soon as early next week ,, but my thesis is that end of March (Last week of March) could be a “crash type of move” down ,, a very ugly nasty move coming by END of March. VIX is also a ticking bomb imo about to explode. I switched to UVXY as I believe this is following VXX much better than TVIX. (UVXY 30.8)

See you all next week and enjoy the weekend.