When you first look at the weekly candlestick, it initially suggests fear. This candle is a gravestone doji, but it's not as bad as you might first consider. The downside is that the bears fought back the bulls, but it really suggests indecision. If the doji was completely above the prior bull run, it would suggest a reversal and possible buyer's rejection of higher price. But this was not the case.

In fact, we have history on our side at this point, and we can look to June '12 for a very similar set-up. The most likely case is that we have a reversal in price to last weeks highs, somewhere in the mid 144's. Personally, I think this is strong enough that you could play this bump if you want. Still, you do need to be cautious if you are going to. 

The fiscal cliff stills seems likely to unfold into a mess, but remember that moving averages take the path of least resistance USUALLY. We broke the 12 week downward channel to the upside, and with two weeks above, it does not appear to be a random head fake. I suspect that rather than go through the LT rising wedge trend line, it may try to make one last pass up. Keep in mind, there is not much more wiggle room, VIX:VXV is .94 after a 3 day down pattern. A play now DOES carry danger with it, but danger is usually rewarded if you are right. We are still in a news-driven market, so things can turn quickly and the market is obviously nervous. So basically, this is a swim at your own risk situation, but there could be a decent upside on the short term.

If VIX breaks 18 intraday, there could be reason to worry, but I don't think I would short the market right now, unless VIX really starts to spike. John Boehner's consent on higher tax rates seems to be signaling a decision in another iteration or two of negotiations 



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