Below us this week we have the 876-880 support level which I would like to see hold. If the price action falls beneath this area I think we can see some selling down to the 850s where stronger support resides.
Economic data being released this week is light. Tuesday we have final GDP for Q3, Existing and New Home Sales, Mich. Sentiment. On Wednesday we get Jobless Claims, Durable Orders, Personal Spending and Income.
One thing to remember about holiday shortened weeks is that they tend to do things that shouldnt happen if there was regular volume in the market. So expect the unexpected for this week. Basically anything that occurs for these next two low volume weeks should be taken with a grain of salt because the first week of January will be the one where the markets true direction will take hold. But nevertheless, these next two weeks we could of course see a nice Santa Claus rally, or whatever you wanna call it.
Overall, I am bullish on the SPX if we hold these levels and specifically the 876 support I referenced above. Looking at the daily chart you can see that the price action is contracting tighter and tighter the last several weeks. This is evidenced by the Bollinger Bands (green colored lines) becoming tighter. When this happens it is telling you that the market is coiling up, and like a spring, it will eventually pop. The other thing the bulls have working on their side is the 20 ema curling up and approaching the overhead 50 ema.
Until the SPX breaks below 876 or above 915 I would only be swinging for quick gains because it will likely be choppy till then. But it is coming and when the breakout or down comes then you can let your positions ride a bit longer.