1. Seasonality: This week between Christmas and New Year is traditionally positive and seasonality factors are particular strong and trustworthy this time of year. This does not mean that this year won't be different, just that the probabilities favor a rally. 2. This is the first time that the QQQQ has pulled back to its 50-day average since the bull market began in August. Pull back buyers defend the 50-day average in bull markets. 3. Oscillators are very oversold at this point. Now understand, oscillating indicators can and do stay oversold for very long periods of time in some markets. However, this usually occurs when the market is trending down. During an uptrend, oversold oscillators are buy signals and at a minimum should not be shorted.
Today: Don't be surprised if the market opens weakly today. In fact, we hope that it does. Weak opens at the beginning of the week typically invite buyers who fade the early weakness causing a strong rally to ensue.
If, however, the market does bounce here, but does not find any follow through buying higher, we will need to reevaluate our bullish posture. This is just an "if" at this point.