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Thank you for the feedback about liking the script of the video. Here is this week's script.

Can the Feds' magic  overcome the Technical's and  the triple witching Friday and .... will Santa call?

 In addition it is also possible the January effects start a bit early as the markets are making new highs in the year and since the start of the  rally of the  March 2009 lows. The Fund Manager may take the opportunity to rid themselves of their poorest performers here at their highest and pump their portfolios of the names which will make them look good.

The economic calendar is also rich in information next week starting Tuesday before the open with the PPI and retail sales. The FMOC rate decision will come later that day at 3:15 pm EST.  Traditionally the days leading to the FMOC have yielded high price action at first then a sideways waiting movement. I do not anticipate it will be any different.

But we are still making new highs and we are getting to levels difficult to justify at the moment considering the economic conditions. Do not underestimate the news either, and one piece of news I would keep my ears to, is the vote in the house on the "Bush" tax cut extension.

The S&P Monthly chart reflects the impressive December start. We have gained 56 points in 8 trading days. The 8 ema cross of the 50 ema is now more pronounced and the indicators are still very much bullish. Notice the %K on the stochastic has now reached overbought but the %D is lagging at a good distance.   .... and have we forgotten about that 62% Fibonacci retracement level so talked about in April? We have now exceeded that level by 12 points.

The Weekly chart continues to demonstrate the bullishness of the markets at the moment. We are still building the Wave 5:5. A wave 5 by all account is an impulse wave ( as opposed to the corrective 2 & 4) and while it occasionally equals or exceeds the price action of the Wave 3 it most often is shorter.  I have delineated some key price projections from the wave 3 which should be watched in the future.

It is worthwhile to look at the weekly indicators this week. The RSI, Stochastic and Wm%R are still bullish but the MACD is starting to show some weakness. While we have formed a bearish cross yet the histogram has printed smaller and smaller bars which indicates a loss of interest on the buy side for the moment. Price may still move up for a while but the divergence must be watched.

When looking at the daily chart I do not see the type of candle that would point to a reversal , but this does not mean it cannot happen. Friday's candle was a strong green candle and while it may lead to further upside it may also lead to several bearish pattern such as a dark cloud cover, a bearish counter attack or even to a evening star pattern. Be sure to visit our education section and download the Candlestick pattern spreadsheet.

I am pointing this out because we have not had a close lower than the previous day yet in December. As a matter of fact we have on had one close lower that its open. Lastly we are making new highs going into a FMOC meeting and a triple witching Friday entering window dressing and January effects. I suspect we shall see a pause in the market in the later part of the week.

The daily indicators are all overbought and only make me more suspicious of a needed pull back.

Getting to the 60 minutes charts, I can see the first minor advance (1:5:5) is getting close to a final count. As you may recall I was not suspected the minor "iii" and "iv" were not in the right place. I am much more comfortable with this new count. The minor "v" will complete the 1:5:5.  I like to model my targets for any wave 5 based on the first wave and the fibonnacci level here reflect the mostly likely levels, between 100% and 162% of the first one. IT sounds like 1250 is a good target for the moment.

A target of 1220 or 38% retracement from 1250 considering the timing now looks like a likely target for 2:5:5 but we may not get there this week, we'll see.  The buy the dip buyer should return then looking for the bargain January effect stocks.