Today's rally faded into the close as the sellers were able to flex their muscles. Now that the market has broken below 1295, it should make its way down to 1250. The market is a bit oversold so it could stage a short rally within the next day or two, but ultimately it should finish the week lower....unless some incredibly positive news comes out. If you got into some puts last Friday, you should be doing okay on your positions. Silver (SLV) hasn't cooperated yet, but the price action over the last two days has been a bit bearish. Although the overall price has moved higher on both days, the price movement hasn't been strong. Both days saw the price gap up at the open, then fade to close lower than that opening price. This shows that the sellers have still been able to push the price down during the trading day. The 5/31/11 high will be the key area to watch. This current rally should not go above that high. If it does, silver could continue to move up to $40 or $41. The VIX dropped today despite the market being down a bit which shows more complacency from the professionals. This tells me that the institutional investors likely believe that there is a support level in this area and the market should stabilize and move up again...that they don't need to run out and buy more protective puts on their positions. The institutional investors aren't always right, but I do respect the fact that they probably know more about what's going on behind the scenes than I do. It's one thing to see them stop selling, it's another thing to see them actively buying. Until I see that, I'll still look for the market to move lower.
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