S&P 500 Morning Analysis 12/15/09

It is easy to complain about how the market has a small range each day and that the volume has been declining, but you cannot deny that prices have been climbing higher and that has to have the shorts feeling uncomfortable. For the third day in a row, the market gapped higher and traded in a narrow range, but it holds the gains. The SPY closed at a new annual high yesterday and also closed above the high end of the recent range. We will now view 111.35 as the short term level of support which will need to hold for the market to maintain its upward trajectory, below that we have to be more defensive, but the larger 110.50 level should offer support if 111.35 fails. The path of least resistance remains higher and it is futile to try to fight it.