SPX breaks below 50 SMA... June swoon?

This was written last night but I realize it was not posted. Some additional thoughts after today's action: mixed signals! on the market as the jobs were not too bad but ABK, MBIA to be downgraded most probably. Anyway... Dug was the place to be today. The SP shot up but closed still below the 200... still bearish...I bought POT today around 208 with a small position... I will buy more and also probably buy MOS if the prices drop. Gotta have some of one of these two... SRS... I still like it and hold it... I admit until it breaks the 50 there are better plays short-term but if it does break it it can have a long way to run. Anyway... here is the post..




The SP is now below the key support area. June swoon coming? I don't know but the charts are not looking good for the overall market. I bought SRS today at 86.51 and SDS at 88.81. SRS for the reasons I mentioned on the last post, stop in the 83.5 region. I bought SDS because I have been following this the most and while the financials are in big trouble and I am looking at them SKF has already run quite a bit (though it could definitely go further). I usually like TWM but the Russell is shuffling their names and this can lead to hedge fund manipulation and uncertainty in the near term. DUG is also looking very good again here. India is complaining about high prices of oil, the congress pledges they are looking into speculative manipulation (I guess it took awhile for the markets to react to that) and demand in the US is slowing rapidly. Any fear that this begins in Europe and ... yikes... Asia as well due to inflation means the gig may be up. I think the smart GS types are selling any strength to lock in profits... Oil prices have started to come down and DUG, is still low after the recent run-up. Also the chart looks like it is forming a consolidation pattern of a sort with the potential to break...
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At the same time the big fertilizer stocks have been consolidating and are looking to shoot upwards. I have been waiting for the overall market to produce a pullback as entry points for my favorite longs right now (MOS, POT, MA... which is my favorite company as I bought it at the IPO... unfortunately sold in the 200s before I realized that it will take a long time and a full global recession to significantly slow this companies' earnings... the biggest threat here is if consumer credit in the US gets so out of control that Credit Card companies stop lending... but then there is still debit cards and the rest of the world).

Anyway... we'll see... if a breakdown of the SP starts to begin the next leg of the downturn. I will buy POT and/or MOS depending on price on if this happens. (MOS hasn't shot up as much recently but POT is the blue chip of fertilizers). If these guys run without the market I'll probably get in, just not as heavily, and run with them. There are few stocks that can almost guarantee a 25% or higher return in the next year... perhaps even if the market collapses in 09.

I have done the research and continue to do so. The coal plays will be huge next year. They have run up a lot now and may correct... should correct... since the contracts for their prices are not going to pay until next year... but the anr's and cnx's should be on everyone's radar screen.
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Some other notes...
FEED and HOGS (mentioned on food industry post... see top posts) shot up on word that there will be a supply shortage in China this summer... before the run up I was looking at FEED since a move velow 14 almost always generated an upswing...

Also a totally out of favor play... I bought a little bit of CMED (one of my favorite plays for the long long haul) despite ugly technicals and concern about slowing HIFU sales. This company is no longer about HIFU as much (though don't entirely count it out) but about it's IVD products. Healthcare spending backed by the govt is projected to grow mid teens for the next decade and the government will do almost anything to bring the country up to par. We're talking about a country four times the size of the US with a tremendous need for advanced medicine...

The earnings for this company have been "slowed" due to an accounting term called amortization which does not affect cash flow. There aren't many companies with bad technicals that I am willing to hold for the long term in this market but a little CMED before earnings (June 12) at these prices is just too hard to resist. If the market collapses I may buy more. I'm thinking of holding or at least getting in and out of this company for decades. Some people know EFUT like no one else. I believe that I know CMED like no one else... ;)

Anyway...
Here are some relevant charts... updating SRS, DUG, POT, and MOS.












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