The last couple weeks to close out 2009 really didn't give us too much of an indication as to where this market is headed. We are still trading in the $109-$112 range we have seen since mid November. Yes, we did see a small breakout on limited volume above the $112 level, but that really didn't provide any confirmation. If anything, it was an attempt at a Bull Trap. So until we see price movement that breaks out of this range (which we can now say has a top of $113), we really don't know what is going to happen.
If you follow my blog, you know that I am bearish, that I am waiting for a correction in this market. However, I don't see any overwhelming signs that indicate it going to happen right now. We do need to be prepared for that possibility, but we need to allow the market to inform us what it is going to do rather than try and make presumptuous calls. I was actually expecting that new highs might be achieved to end 2009, but instead we got a nice little sell-off to finish off the year.
So, in the short term, it is looking like we could very well test the bottom of the range at $109 to $109.30 on the SPY. There really aren't any signs that suggest we will see movement lower than that yet. The SPY weekly chart is still pretty bullish (See Chart Below). Although, there is a small sign of weakness to be aware of. The Dip in trading in the final 30 minutes on Christmas Eve put the weekly bar below its current uptrend line. Something to be conscious of, we'll wait and see...
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