S&P 500 - Dec 21, 2008

charts courtesy of stockcharts.com

Very boring action for an option expiration day.

We keep looking for Santa, and find Scrooge instead.

Nothing has changed. The action just looks tired and listless. It cannot stay like that forever, and sooner or later we should see some volume and fireworks.

The two patterns that we have discussed, Inv. H&S and the rising wedge, are still in play.

Daily Stochastics crossed below again.

Despite the overbought and rising nature of the breadth oscillators, index is not doing much. Some may say that this is a sign of quiet, tactful accumulation, I just have a hard time seeing that without market getting into overbought regions after 5 weeks or so since November bottom. But, the rally is still there, and there is always the Santa to seek

I do not mean to say that the rally is doomed. Just that more and more it looks susceptible to at least a pullback.

There are many opinions out there as to how this will resolve. To me, the index is stuck in a range (I am even boring myself repeating this point), and unless one’s a fast-finger trader, one may fare better on the side line waiting.

If I felt compelled to take a side, I would start slow, and would definitely look at options, especially since volaitility has been shrinking nicely.