Last Day of 2008

Pre-market futures are up a little on carry-over from yesterday's bump. The SPY may test 90 (900 on the SPX) this morning. Remember that today is the last day (and trading day) of 2008, which means the potential for tax selling (and possibly short-term capital gains selling). Since the year has been bearish for most fund managers, and only recently been flat to bullish, then tax selling will be more in focus than capital gains selling. However, if we get light enough volume today, then both types of selling could affect the market.

I'm looking for a bullish open and a decent morning, but later in the trading day I will watch closely for any year-end selling.

Here is a chart of the SPY:
(click on image to enlarge)

You can see that the market held the gap yesterday morning and rallied, just as I warned was possible. I "paper" traded some nice calls off the gap for a profitable short swing. In fact, there were multiple intra-day stages during the day. I don't expect the same type of day today, but perhaps there is one more stage to go this morning. As per these Holiday conditions, I'm staying with intra-day swings, and I'm not spending a whole lot of time fixating on the market. Enjoy the New Year, have a happy time with family and friends, and all the best to you in 2009.

7:55 am MT: The SPY pushed to 89.50 on the initial morning thrust I was looking for. The market may have one more push in the current 15m - 30m swing, but I would expect that the absolute best case scenario is a ceiling at 900 on the SPX and 8,750 - 8,775 on the Dow. The market may have one more base in the current move, so watch the 15m - 30m charts for a Bull Flag. If the market can build off another base, then I will watch carefully to see if we make a higher high or not. A Double Top intra-day could signal the first stage of tax selling. However, for the the Bulls, so far so good.....