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Pro Shares Ultra Pro S&P 500 (NYSEARCA:UPRO) is a triple leveraged fund that seeks a 300% return on the performance of the S&P for a single day. Conversely, The Pro Shares Ultra Pro Short S&P 500 (NYSEARCA:SPXU) seeks a triple leverage or 300% return on the inverse performance of the S&P 500. If you believe, as I do, that we are setting up for a leg down on the S&P then SPXU is the best way to profit from this trade.

Singapore's former Prime Minister Lee Kuan Yew put a damper on any European hopes for an Asia-led rescue, even as China offered vague words of comfort and the eurozone's bailout fund expressed confidence in Asia's strong support.

Just hours after German Chancellor Angela Merkel and French President Nicolas Sarkozy declared that Greece's future remains in the eurozone and agreed to widen the scope of the European Financial Safety Facility, there was scant evidence that Beijing or other deep-pocketed Asian governments want to deepen their commitment.

With speculation of a Greek default causing yet another flurry of high-level meetings and turmoil on global markets, attention turned to potential help from Asia.

While there were hopes that China would be actively buying bonds from the Euro nations, Singapore, in an article in this morning’s Wall Street Journal, said that with an economy just one-60th the size of Europe's, they were in no position to rescue the Europeans by buying their bonds. Nor did they think that buying their bonds would necessarily rescue them.

The eurozone has a fundamental problem in making all member countries march to the same drummer, but you cannot expect the Greeks to march like the Germans.

The fact is that China can't purge the world of the economic crisis. Indeed, some countries have overestimated China's role in the global economy. The fear of contagion is a domino effect in which European banks with exposure to Greece, Portugal, Ireland, Italy, and Spain have come under the microscope and this has contributed to a lot of weakness of European equities and the euro. As I wrote earlier, Italy is actually a country that is too big to save.

I conclude that market investors who have firmly placed themselves on the side of believing that a Greek default is almost a sure thing are in a state of full blown denial. In my opinion, Greece has already defaulted. It’s just a matter of time.

With a break of 1258, I believe that the S&P has completed a major distributive top and with the deteriorating picture in the world equity landscape, it represents the start of a new cyclical bear market. I am sticking with my call that we are witnessing the first wave of bear market that will begin no later than early October. The macro picture is that we would see a fourth quarter rebound that would set us up for a deeper bear market that would likely last deep into 2012. Please see chart of S&P below.

click to enlarge

For those of you that read me on a regular basis, you know that I have been calling for a sell off on the S&P. Yesterday's market would lend credence that my SPXU trade is still in play as the S&P closed at 1188.88. That is 1.22 points under my resistance level of 1190.00 so today, bears are keeping a watchful eye on the S&P and SPXU.

As I have written, while my timing may have been off on this trade, if the S&P continues its rally I will continue to buy SPXU because by early October the S&P will sell off to at least 1050 / 1032 and if it breaks that support will continue lower.

Source: We Are Witnessing The First Wave Of A Bear Market - SPXU Trade Still In Play