LET'S LOOK AT THE S&P 500 INDEX

You can see the past two days have struggled and there should be a two or three day move down follow by a test of this weeks highs. You can look for support around 1132. This is starting a large sideways movement so the 1220 high will be tested and the 1060 low will be test and likely two times during the next 6 months. The high was exactly on the "50% time" of the 5 year cycle. Within this cycle there are some possible vibrations. If a low shows up around the 5th of June then the 20th could be an important high.

NOW LET'S LOOK AT THE FORECAST FOR THE S&P 500 THROUGH 2012

The dominant cycle is the 5 year bear cycle from the 2007 high. This weekly chart roughly shows the next 2.5 years. The index has started a large sideways movement that will be distribution for a bear trend and that trend will last 1.5 to 2 years and end either September 3, 2012 or November 28, 2012. Those two dates are cast in stone. The date the movement "on the side" ends and the downtrend begins is not yet clear nor is the extent of the decline but this is a high confidence forecast. The index will start down from a break to new highs and that price could be 1247 as I previously explained. The index should test the highs and lows to the sideways pattern 2 or 3 times.

I've been in this business 45 years and what occurred on the 6th was criminal behavior. Tens of thousands of traders and investors had their positions stolen from them with their use of protective stops. This was a failure of the exchange to keep an orderly market -- that is their primary responsibility. It is not to facilitate program trading. But the rules of the exchange have been changed to facilitate program trading which now is the majority of trades on the exchange. In fact one firm controls 50% of the NYSE volume. These programs manipulate the markets for very short term profits and should never be allowed. It is now a week later and the exchange says they don't know why the 1000 point decline occurred. I don't believe it. There are two things that could cause that to occur, the first is it was orchestrated by a few members or it was a failure of the exchange "rules" governing program trading. Neither of which they would ever admit too. But their failure to keep an orderly market, while allowing program trading to dominate the market should have them legally responsible to all the investors who had their positions stolen from them especially if those positions were taken as principle by NYSE member firms. And on that happy note-have a great week end.