Here is a 30 minute bar chart showing day session e-mini trading for the past two weeks.I think the market is in the process of building a short term top near 1253 resistance defined by the March 2008 low. The next development in this topping process should be a break of 15-20 points down to 1240 or so. Such a drop would match the size of the last reaction (blue rectangle). It would also put the market at support defined by the last minor top (red dash line) and the lower trend channel line (green dash line).
I expect this topping process to be completed early in January. It should be followed by a break of 50-75 points. In a bull market reactions typically end at or a little below the 50 day moving average. In the cash S&P 500 this moving average currently stands at 1209, equivalent to 1205 in the futures.
After this 50-75 point drop is complete the market should resume its rally to 1300 and higher.
