We started 2012 by observing that we probably won't have to wait a long time to see whether the market will continue on a bullish or bearish path. The choice was made right on the first trading day of the year, and the SP500 has been trending up ever since. This establishes a new monthly trend channel with a more sustainable slope:

In addition, the trend indicator we introduced two weeks ago remains up in all three time frames - daily, weekly and monthly. So what can go wrong?

Well, for one the Q's are bumping up against long-term monthly resistance once again, and since they are the leading index, we need to keep a close eye on them for signs of break-out or failure:

The weekly OEX, NDX and DJIA indices, have been overbought long enough to flash a warning that a reversal may be imminent:

And lastly, January 20 is the date when both my bullish and bearish seasonal forecasts for the SP500 turn down.

In summary, absent a clear break-out above resistance from the Q's, now is not the time to be complacent.

On that cautionary note, I'm happy to announce the upcoming release of a new member of the OddsTrader family of apps - OddsTrader Trend. OT Trend will help users discover the hidden rhythm of the markets, and quantify the constant ebb and flow of seemingly random market action.