As soon as any buying appeared in the markets, that move was sold all day long. We had an all day downtrend. The last 30 minutes provided a little relief taking us off the lows of the day. The SP has now dropped back into the 850 – 860 levels of support. Tomorrow will likely see more low volume trading as we go into the shortened holiday week. This will allow for markets to be pushed around rather easily. One data point I have mentioned before is Monday after options expirations tends to be down, and we saw that yet again today. NL did tick up a bit more today reaching for the 200 levels and pulling the NH_NL index back toward -200. The short term overbought conditions have been relieved, but the lack of upward progress is troubling, an indication of no willing buyers at prices above.If we test the 850 level, we will need to see a false side break and reject the lows near that level. Volume needs to come into this move on the upside. In a holiday week, anything is possible… maybe Santa has already given us our rally? Today was uglier than it appears from the close, downside volume was over 80%, so most stocks were being sold today. Also, the tick reading rarely got over +300 indicating most of the trading was sellers hitting the bid price. When buyers have no one following up with them, then they have no alternative but to flip and become sellers unloading their purchases.We’ll see if Santa has any intentions to show up tomorrow and then Wednesday is only a half trading day.

Alex and Pat is in the Caribbean enduring some pain and suffering. I just spoke to Alex not long ago about some new featurs in the future for the spike group. He sounded in need of a cigar and a glass of wine. I have high suspicion he was partaking in his medication. As for me I intend to take an easy evening of sipping some scotch and watching a movie, a night of just resting the mind and enjoying a quiet evening. The weather here has been nothing but rain and dense cloudy skies. A movie night in the media room sipping a nice scotch seems to be in order.The Big three gets a bail out, or do they? We will see if this occurs or some adjustments to this plan will occur after the new administration comes in. The Auto Unions are calling for a reversal of the plan. The action was choppy as usual for options expiration as the completion of the last FULL trading week of the year come to an end. Next week will be a short trading week as the holidays approach, volume will begin to dry up. We will see if we a continuation of the Santa rally.The group ended the week positive as Ross wins Gold, Susie wins Silver and Peter takes the Bronze.Spike Members, Dennis M, Henry A, Hsin Y, and Rod S wins $20 dollar credits. Congrats to all this weeks winners.I look forward to seeing each ones new pick for next week and look forward to writing SpikeSpeak this weekend.

As we see more and more deterioration in the economy the size of the O’Bama fiscal program continues to grow. Fed actions usually do not have an immediate impact that lasts for weeks on end. It takes upwards of six months for fed rate actions to work their way into the economy and they can take longer during extremely bullish or bearish periods.

Volatility has shown some indications that it is slowing as the VIX fell to slightly under 50. That’s still very high but the trend is showing some positive signs in the last few weeks. Many of the commodities continued to rise today. In a conference call the CEO at CMC indicateed that the new movie, "The Earth Stood Still" appropriately indicated what had happened in the steel industry since October 1. (Trust me I know, this has been the fastest and most severe slow down I have seen In 20 years) The stock rose over 10% for the day. SCHN was downgraded after missing earnings estimates. Their stock price rose over 5.5% for the day. Another sign of markets rallying in face of bad news.

Financial stocks led the market’s gains, with Citigroup rising 11% and J.P. Morgan Chase gaining 13% amid an 11% bounce in the sector.The SP held above the 840 levels yesterday and gapped up today never looking back. The issue now is this sent us right back into short term overbought conditions. Volume was light considering it was a FED day.We now have the 910 – 920 resistance levels we need to clear. If we can continue marching forward then back and fill, the market has a chance to challenge the 1000 – 1050 levels.NH has not expanded yet and likely will not for several weeks or months. However, keep an eye on NL each time the market pulls back. We need these NL to collapse and stay lying on the floor for a rally to be sustainable.The reversion back to average on the weekly charts of the SP is near the 1050 levels.

Despite another bad news day the market held up well and remained above 840 -850 levels on the SP.Bloomberg indicated that 30% of the hedge funds will be defunct by the end of this year, with more to come next year. Hedge funds can delay the payment of redemptions but sooner or later they have to do something. Pressure by the participants forces hedge funds to sell into weak markets, which exacerbates the selling pressure. Concerns caused by the Madoff mess, with losses likely to be in the tens of billions, will provide more reasons for hedge fund investors to get out.

The winners of another tough market week:

I love marketwatch! The market rises on rising oil. The market falls on rising oil. The market shrugs off the unemployment report. The market tanks on bad employment data. They always tell you why the market is doing whatever it’s doing – there is a new reason every day. This is precisely why I live without a TV set and derive my information from the best source – the reality of the charts.

I am here in NY and just retrested from the terrace after taking a nice dip in the hot tub. A campers meeting is about to be under way here at Alex’s slum in NY.The market continues to digest the big run up from Friday and Monday as we discussed. This is encouraging as the market holds its gains while working off its short term overbought condition. Soon we need to see another attempt to move higher and it also holds its gains. NL is being contained and as mentioned on many occasions NH will take some time to expand.