12.12.2011 -- Market is in a position to sell off..

If it wants too.. that's a big IF right here in front of christmas, the way the technicals are set up, the market has an opportunity for a good drop here if it so chooses.

Details to follow....

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Key Levels

Upside -- 1243, 1262, 1282, 1305

Downside -- 1221, 1205, 1140, 1121

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SPX Daily;

Our old channel just wasnt working anymore, so I replaced it with this fork and smaller channel. The large wedge is still in play as well, but I didn't draw it here because it gets too confusing with the new fork in there as well.

So, details of why this market is set up to sell off here;

1) It seems like we are just whipsawing up and down here.. BUT, the bollingers are rising.. so while we are basically in the same spot we were a couple days ago, the mid bollingers have risen above and we bounced off the bottom of the bollingers today. So we are in fact taking out support.

2) The bottom of the bollingers, the 100dma, the 50dma and bottom of the channel are all clustered within 30 S&P points down. 1 really big down day or a couple good sized down days could take out all that support. If that were to occur, we would be left with hardly any support down to about 1140 for weakish support and then back to our 1121 support.

3) The bollingers are curling over, the 200 and 100dma's are both still in a downward trajectory.

4) The Stochs and MACD are both sitting at a point that could kick off a severe round of selling for several weeks before being very oversold.

5) Nobody would expect a big decline right into christmas.

so.. we shall see.. but the opportunity is there. the set up is there. we'll see if the market shows its hand at all.

GL

CJ