Weekly Outlook 1/4

As we start 2010 I wanted to say Happy New Year and let's all break through resistance in our own lives in 2010 doing whatever it may be!

As for markets I gotta say I'm lookin into the crystal vase and seeing some good chance we see a 5-10% correction here in January. Sentiment has gotten a bit too complacent the last week and we are overbought in just about any way you look at the short term. The McClellan paints the clearest picture to me and says we should see at least a test of the 1080 support level in the SPX going forward. At that point I would start to look at longs and bear traps.

Longer term in 2010 I still think we go higher and eventually see the SPX at 1250. The weekly and monthly charts still look good but short term we are due to see some selling pressure. It's always good to try to let the first few days of the year play out and not get too aggressive. We could see at least a small bounce early in the week before a pullback so be prepared for that. 1120 should prove tough resistance on any retest this week.

Should be interesting to see if oil can get thru that 80 mark and hold. I doubt it. So if we do start to rollover than the energy sector could present some nice opportunities to buy puts. On the other side, the banks (GS specifically) look strong and ready to grind up.

Buy the dips>> GS, LAZ, RYL, ARRS

Sell the rips>> JAS, DO, FDO, GLD