Week outlook

Breadth has really deteriorated over the last couple months. There are many ways to see this. I have included two. The A/D line also did not confirm this most recent high and has turned down. Can it turn up here? Sure. The Russell 2000 and the Midcaps are both trying to hold their 20 day average, and there is a nice gap up around 600 in the R2K... right where its 50 day is too. I will be watching 600 in the Russell and 1096-1100 in the SPX.

Although the bias really doesn't hold over the last decade, there is a belief that one wants to be long for the holidays, so that could feed into some buying. It could also disappoint if it doesn't happen. I think there could be a strong desire to lock in some good numbers for the year, after a horrible 2008.

As of now, I am short but I will probably play with a close SAR both ways. I could get chopped a little but for now its the best strategy I can come up with. Fundamentally I remain bearish and think this market is over valued. That thought pattern hasn't paid a dime in the last 7 months though.