Metals and Miners are bustin' loose

The broader markets are squirming hard to get back up to their old highs.  The NASDAQ Composite made it but the DJIA and S+P have not confirmed it.  The 8 up days that just happened in the S+P 500 were preceded by 14 down days in a row.   The next 2-3 trading days will be critical for the large indices.   They will either trace confirm new highs and thus the continuation of the bull market or they will fail to do so an put the recent rally in jeopardy.  They will either confirm 5 waves up or they will form an a-b-c and then roll back over.  The S+P 500 is looking increasing sluggish, forming a rounding curve to it so this is something to watch.

But why worry about shorting the broader markets when money now seems to be moving into the metals and miners?  The break out is looking more and more real and if it is then USLV is a great way to play.  It's up 50% from its lows already after having broken out of the down sloping resistance line and then again crashing through the nearly horizontal support/resistance line with gusto.  The oblong down there is clearly a 3rd of a 3rd wave gap.  I sense that you will not get much of a pullback until $65-$70.  When that pullback happens it will be a 2nd wave up after a long bear market.  That means the shorts will probably be piling in hoping that the sucker's rally is over, just like it has happened so many times since early 2012.

I'm not convinced that this is THE break out, as in a new, long term bull market.  But this is definitely a strong rally with big percentage points in it for USLV longs.  The next major resistance point is to the top of the rail that is parallel to the down sloping support rail.  This move would also fill the gap.  That could take us to the month of May where I think there is danger for all of the markets given that the January effect was negative.  We could easily see a Walk Away in May year unfold.  

The global situation is not good folks.  There is record high unemployment in Greece and Spain and Portugal and their political scene is rapidly changing.  As Mish has been saying of late, some day a charismatic leader will rise to power in one or all of those places and he will say "we are not paying another penny of debt repayment".  The people will go ga ga over not having to repay their sovereign debt, the resolution will be passed and the sovereign debt default domino will begin.  

Every single nation in the world is actually bankrupt right now.  Some are just ridiculous about it like the PIIGS.  Others are hard to tell by looking today because they are creditors.  But when their debtors default, the one who loses the money is the creditor, not the debtor.  The debtor has already spent the money and the ONLY reason not to default (besides wars and famines which the elite don't care about because they mainly affect the little people) is to live to borrow another day.  But if the credit rating is shot already and nobody will loan more cash to you anyway in order to pay the interest on the existing debt and the people are already suffering under the burden of the austerity then there is little reason not to default.  Please do not think that a chain of sovereign defaults will not decimate the stock market.  It will crush them beyond recognition.