The ramp up last Tuesday gave traders a better short entry at 1519. And, as we anticipated from our analysis of market internals, the down swing lasted two days. The SPX bounced off support at 1500, and ended the week in the sweet spot of the current uptrending channel. In fact, Friday's range defines perfectly the two key levels to keep an eye on at the beginning of next week:

The DJIA remained on trend, zeroing in on our next target level:

The Qs bounced off support as well, and remain firmly within the January box:

Market breadth declined for the week, but finds itself at levels from which it has rebounded many times in the past:

The same can be said about the Bull/Bear index:

In summary, the trend remains up for the three indices discussed above in all three time frames: daily, weekly and monthly. While most dismissed the Fed's threats to put an end to QE as just crazy talk, very few expect that Congress, in their ultimate collective wisdom, will come up with any real, meaningful solutions. Therefore, our expectation is that the next downdraft will be triggered by that wild card.