A Scenario For Next Week

I'm still looking for one more high in the S&P. I scaled into OEX 535 calls between 12:00-12:45 today. Should I be correct, I would think we'd see the market gunning for the highs into Friday and then mark time into the election and the Fed's QE2 announcement. I will likely take partial profits on these calls today and let the rest ride, hopefully fully paid for.

Right on cue, the Fed are already backing off from their early intimations. I think QE2 will be a dud. Regardless, I smell some election and QE volatility coming that could cause a final marginal low in the USD, a high in the S&P, and a high in yen and possibly other markets as well.

My focus remains the following: I want to be long USDJPY under 80, long mini VIX futures under 19 and VIX calls, long VXX, short S&P somewhere above the last highs. A strong close much over 1200 on the cash index would very likely mean this analysis is wrong and that we would exceed the April highs on the way to 1250.