Last week we focused on the tug-of-war between bullish sentiment, driving markets up since October 7th, and the uncertainties associated with the European financial crisis and Italy in particular. It should come as no surprise that under these conditions there were large swings in both directions. After all was said and done however, we were left with an inside week, and the prerequisites for a continuing volatile environment remain in place.

The SP500 traded within the Hurst channel which, by the way, does a great job at measuring market volatility. This is one of the tools easily accessible through the OddsTrader app.

Another useful tool is the Risk/Reward Oscillator (at the bottom of the chart), which did a great job at identifying overbought/oversold opportunities even in a rangebound market.

It's interesting to note that Louise Yamada has now recognized what I have mentioned regularly in these weekly updates since early October: the similarities between the current state of the trend and what transpired in 2008.

The outlook hasn't changed much since last week. The SP500 remains within the consolidation zone marked in yellow, trapped between support/resistance zones.

Weekly support/resistance levels, courtesy of OddsTrader are 1289 & 1314, and 1212 & 1188, pivot line at 1252.