The year started out strong for US stocks, breaking out above the range that had pervaded much of the last two months of the 2009. The S&P also finished at a recent high, closing out strongly on Friday. Volume was not great and throughout the week there were numerous examples of times when the market barely seemed to be open - the futures and many stocks stuck in small ranges with no activity whatsoever. None the less, the bull rally has continued.

Thanks to Friday's quiet afternoon and aggressive close, initial support for this market comes in just above this range at 1141.60 which is also Thursday's close. Further support for the week comes in at 1139, 1136 and 1131-1129.50. A series of lows is collected in this final area. Due to last Monday's aggressive buying off the open, there is little support below this area for some distance, although some support may come in just below 1128. Further support comes in at 1123.50 and 1116-1114.50.

The weekly average (14) range for the S&P is 31.8 points. Volatility has been dropping off significantly and pretty steadily since early Nov (and over the longer term as well). With volume lower, volatility down and much of the gains over the last 5 months coming from gap opens instead of intraday movement, the market seems rather complacent. So far, in the first week of the year, the market tended to open low but then rally into the close for a positive gain. Whether this dynamic continues into this week is yet to be seen.

Resistance has clearly been broken on the upside, and very little stands in the way of further moves higher. The target for the range breakout was 1146 and 1149. The S&P closed at just about 1145. Profit targets are not reversal points, the market could easily keep going, none the less these points can be significant and we are very close to them. With "nothing but air" on the upside, resistance beyond comes in just below 1154, followed by 1160 and 1168. After this little resistance remains until 1180. Intraday action throughout the week will provide additional resistance and profit target levels. Once again keep in mind the average weekly range for this market currently is 31.8 points (both up and down) so a move to these extreme levels is not highly probable with volatility dropping.

The attached chart shows current trendlines and some major levels worth noting.