While the bulls were able to push the close back up into the top half of the weekly range, the SP500 closed below the open, below the close of 1/3/11, and down for the day. The action this week is reminiscent of previous tops in January and April where there was little progress for a week and then a sudden downdraft appeared. Unfortunately for the bears the low for the week was 1257.62 which held above previous resistance at 1256.98. At the moment there is no indication in the price structure that the top is in, and until there is a solid close below this week's low the path of least resistance remains to the upside.
Regardless of how long the market continues to ride the thin air of this uptrend, it is a market skating on thin ice (to mix metaphors). It reminds me of the runups into May '06, Jan '07, Jan '10 and Apr '10. During these final advances it seems that the market just keeps going and going like the energizer bunny, but when it does break, it gives back weeks and months of gains in short order.
In my opinion, the projected cycle high date for the 22 month cycle (1/4 of the 7.25 year cycle) occured 12/30/10 to 1/6/11. It has been my experience that when the market runs past these important cycle turn dates, the violence of the reversal is all the greater. At the moment the SP500 could easily run into the 1313 to 1327 zone before turning. The Qs could easily run to 57+ if this week's highs are exceeded next week. But if Monday is a down day then I think the selloff will be underway.
The pattern on the 5 min chart of the Qs shows what could be a leading diagonal coming off of the opening high, which had breeched the upper channel of the action from the early November high, followed by a rally of 82%, a common fib retracement for 2nd waves, of the decline to the underside of the same channel line. Thus, it is possible that the high is in, but if it is the market will have to start down almost from the open on Monday. If that doesn't happen expect the grind to continue.