Scenarios to Prepare For:

Scenarios This Morning:
SPY closed the last day of trading right above the $111.42 support level. Look to see what happens at the open of trading this morning. 
A) If we move below $111.42 with any conviction... Look to test $110.34 next. If we get through that, look to test the bottom of the range at $109 to $109.30.
B) If we don't move below the $111.42 support, look to test the $112 price level. Breaking through $112 will be quite bullish. The next threat is to break above $113. If we confirm a move above that to start the new year, look for the Bull Market Rally to continue.

SPY 60 minute chart showing important levels to be aware of.

Slightly longer term scenarios (as in days to weeks):

1) The market finally corrects to the downside:

A lot of people have been waiting for a correction for a long time. Is it finally going to happen?

We need to watch the $109 price level on the SPY. This is major support. If we confirm a break below this level it could inspire a significant sell off.

2) The market continues its bullish ways and makes new higher highs and higher lows:

$113 is the key resistance level here. Be prepared to trade in a continued Bull Market Rally if we can confirm a move above that. It will be interesting to see how much volume we see to start the new year. We have been creeping up little by little over the past several months.

3) The market continues moving sideways:

Until we break out of this range we are still in a sideways moving market. Levels within the range to be aware of are (from bottom to top); $109.00, 110.34, 111.42, 111.98, 113.03

Whatever happens, expect interesting times as we trade in January. Look for market speed and trading volume to increase. So be ready to adapt to changing market behavior. Watch for bull traps and bear traps as we do attempt to move out of this trading range.