While trading volume was down over the holiday period, there were significant technical changes seen, as resistance was challenged and broken across lead indices. 

The biggest move came with the S&P 500, as it pushed above 4,725 and managed to retain this key breakout with modest losses over last week. The big question is whether it will be able to hold this breakout once traders return from holidays. In support of this was a MACD trigger 'buy,' an acceleration in trend strength as measured by ADX, and a return to overbought conditions (in momentum) - necessary for a sustained rally.

The index is still outperforming the Russell 2000, but it is losing ground to it. It's an important move and one which could set up a positive quarter - but it needs some volume buying to back it up and we haven't had it yet, as noted by the 'sell' trigger in On-Balance-Volume. 

The Nasdaq is caught in a bit of a no-man's land as it cleared declining resistance but didn't come to challenge the prior high. One thing the push to challenge 16,000 did was negate the measured move target to the 200-day MA. The net effect of this is a likely evolution into a new trading range, although the prior measured move to the 200-day MA had looked a more logical way to go.

The latter is still possible (anything is possible), but it's looking less likely now - at least until the 200-day MA climbs above 15,000, which should be trading range support. 

The Russell 2000 is the canary-in-the-coalmine for a secular rally. We have a double bottom in development which is on course to negate the measured move lower. For it to be truly negated then there has to be a break of the double bottom neckline around $225 (for IWM).

One thing I am liking here is the relative strength improvement this index is enjoying against both the Nasdaq and S&P 500. We have a significant uptick in the MACD - although there is still work to do for both Stochatics and On-Balance-Volume.

The Dow Jones Industrial Average managed a second successful test of the 200-day MA, but was rejected on the test of 36,500 resistance. Supporting technicals are net positive, but as an index it's not really doing a whole lot. 

As we head into 2022, one of the key considerations for the market is what COVID-19 will do this year. The current rally was built on a rebound following the crash when COVID-19 was first discovered. This year is more likely to be a sell-the-news event if COVID-19 appears to be on the wane.

The Omicron variant is generating cases far in excess of previous strains, but it does appear to be less dangerous - at least to the vaccinated. Long Covid poses more of a risk to an economic recovery, with any new strain (hopefully) unlikely to be as damaging as the current one.

While the 'Covidiots' (those not vaccinated for selfish reasons rather than the likely minority who may still be scared of receiving the jab) will continue to cause havoc into 2022, we do have to consider that the pandemic is closer to the end than the beginning - and with that - the likelihood this rally will fade with it.