Bullish Market?

It has been on a tear, but will it continue? The SPY is indicating a tremendous amount of strength. It has broken out of recent resistance levels and for the intermediate term, $130 could be the new low for the SPY. Stay tuned for some charts and illustrations.

2012

Well into the first month of this year and our forecasting from December is underway. We can still look back in time and get an idea of where we could be heading into the near future. Take a look at the SPY for the first half of 2011. This ETF is currently trading in the same range and I expect it will continue until some economic or political news helps with an adjustment.

Also, take a look at the VIX. It is also now trading in the same range it was in the first six months of 2011. Volatility is down and the market is slightly bullish, but overbought and is likely to move horizontally or start to pull back to some short-term support levels.

Sell 30-45 days worth of time for your credit verticals and iron condors. It's the time you'll be collecting moreso than inflation from volatility.

HAPPY HOLIDAYS

Take a little time off for the holidays and relax and enjoy yourselves. The market is likely to do the same going into the end of this year. We may be experiencing a bit of a Santa Clause rally, but we'll see what the institutional traders bring with the New Year.

Bulls are Back

The Pennant formed, broke, played out and the market has since rebounded like an emotional rollercoaster. Yes, emotions have run things quite high. However, can they remain high? Keep your eyes on the SPY as I always say. There was a burst in volumes taking the SPY back to the higher level - above the August and September trading level that is. Now there's a good chance it will trade above the August and September highs as long as the retail industry sees a happy holiday season.

With the VIX back in its "normal" trading range there's a good possibility the market will calm down and rapid price fluctuations will subside.

The week ahead

Although there are financial firms among other companies who have issued pink slips this week, there will likely be more in the next few weeks.
There will be eyes focused on the job market in the United States and there will be a lot of focus on issues in Italy.

What does it boil down to? VOLATILITY.

Watch the VIX this week. Levels above 32 are associated with larger-than-normal price fluctuations in the market. Don't panic when it comes to increasing levels of volatility, but determine the potential trading ranges of the major indices. Unless the major levels of support or resistance are broken, the sideways market pattern may very well continue.