Today is options expiration and I'm surprised to see the futures lower. The way price had ramped up this week, I was on the lookout for a crazy gap higher into 10am as the S&P options expired and then a collapse. Wrong.
If the S&P gets to 1307 I may try some longs there. Much below the 1300 level and I'll start getting worried that a top may have occurred without me counting its formation correctly. I doubt this is the case yet. Instead I think that volatility will increase and things will get a bit "messy" first, and then a final lunge or two will mark the top. I'm not really getting any signals yet but for % issues above their 50 and 20-day moving average -- these indicators are showing some rot. But several others are still making up their minds.
Regarding 1300, there is a confluence zone (an area of agreement between two separate Fibonacci measurements -- 38.2 and 61.8%) there that the market may or may not be attracted to. These are usually quite powerful. That is why below that level would be a signal that all was not well.
European policy makers get together in Davos next week. Let's let the bureaucrats have some fun and make some announcements that may cause some histrionics. I'm sure there are still a few hopeful bulls out there.
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