The week of the December 12 high had high volume (noted with blue arrow) and most high volume highs are tested. If the December 12 high is tested on 10% less volume will suggest resistance and if tested on higher volume will imply the market will move past the December 12 high. The SPY has only retraced 50% of the move up from the October low and suggests the week of December 12 may be exceeded and go to the next higher high which is the August high. The QQQ is up seven days in a row today, not a lot of examples but the QQQ was higher 100% of the time within 5 days with a 1% average move higher. If the QQQ moves higher so will the SPY. 

Bullish intermediate-term rallies form when the NYSE McClellan Summation index falls below -700 and then rallies to +1000. The summation index reached below -1000 in early October and now we are looking for a +1000 to confirm an intermediate-term low. The NYSE Summation index closed Friday at +385 and is now only +615 points shy of the +1000 level and looks promising that level may be reached soon. The bottom window is the NYSE McClellan Oscillator. We circled in red the times when the Oscillator reached a cluster of +300. The current cluster of +300 readings is the largest bunch circled in red, which suggests a high degree of accumulation.

The second window down from the top is the weekly Inflation/Deflation ratio. We pointed out in the past that the Bollinger Bands were pinching on this ratio which suggests an impulse wave was nearing. The impulse wave starts when the Bollinger bands start to spread. It appears the Bollinger bands are starting to spread with the Ratio spiking to its upper Bollinger Band line. The ratio spiking to the upper Bollinger band line suggests the impulse wave will be up.

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