On the Verge of a Major Breakdown

I know I am seen as a perma-bear and perhaps I tend to lean to the bearish side when looking at charts and options actions but looking at all the key indicators, it sure does look like we are on the verge of a major breakdown in the market.

1. The VIX has shown recently it is no longer afraid of the 20 day MA and crosses that residence like it is no resistance at all.
2. The VIX is now starting to sniff the 50 day MA and appears to be building strength to cross that resistance in the not so distant future.
3. The S&P has bounced off of the 887 key resistance yesterday and is now messing with it again. I suspect 887 will hold once again and bounce but the next time it will not. The next stop after 887 is around 850 but that resistance is not strong and the gap to 810 should get filled.

Also looking at SRS, it appears to be in ready for a breakout. This bodes well for shorting KRE and IYR.

UNG (along with oil) had a technical breakdown late last week. Better days will come for UNG but not today. Not until it can break back through the 20 day MA which may not be until late July. Even so, I will hold onto my Oct. options since they are quite cheap at this time.

I think the two key areas to be effected by the breakdown of the market will be financials and tech. Both have had great runs this year but now they have to show true earnings and not beating watered down earnings. I think they will struggle in this regard and will lead the market down to 810 or lower.

The credit crunch is starting to take effect. Credit defaults are rising much faster than anticipated. In fact, many experts had been expecting not only a slow down, but a reversal in credit defaults in Q3. Now we are seeing that there is no reversal in sight. For this, I think AmEx is going to be a great short again, just on the heals of yesterdays upgrade. BAC will also get hit hard by the credit crunch. Should also be a good short over the next few months.

And for those of you fortunate enough to be employed, get back to work and be productive to help get this economy going again. Its slackers like you who read financial blogs during the day which drag down the economy. :) Well, OK, maybe it has something to do with the mortgage crisis, credit defaults and unemployment. But you get the picture.