SPY was not able to close above its October 6, 2008 gap on Monday because of the lagging banks. However, it surged above in the post-market, so it has a good chance of closing the deal on Tuesday. But, the banks are still a potential damper, so I will be watching them closely Tuesday morning. The XLF still has resistance overhead from the two gaps-down left from Thursday and Friday mornings.

The day after Intel reported last week, you could have bought the little dips of the SPX all day long and had 100% winning trades. The next day too. That is a model I am keeping in mind, though like George says, you don’t want to trade under the influence.

If so, it would target the October 2nd low (click chart to enlarge):

Did the market successfully test Thursday morning’s “Intel Gap” on Friday? SPY dropped to the top of its gap and held. QQQQ, IWM, and XME dove below their gaps, but bounced back and closed above.

The XLF was the weakest of the major ETF’s, closing on Friday exactly where it closed just before Intel reported.

Of course, new down-gaps above were created on Thursday and Friday morning.

The market’s next move will likely be in the direction of whichever gap is filled first. So, if SPY closes below 107.51, it will probably continue falling. If it closes above 109.64, it will likely continue upward.

Perhaps the market will range between these gaps today as it waits for Apple’s earnings report after the bell.

Recently, I’ve mentioned the 48.75 level of the BKX banking index. I believe this is one of the primary reasons why the market hit resistance at the end of last week. Here is a daily chart of closing prices for the BKX (click chart to enlarge):

The two red arrows at the left show that 48.75 was support until it cracked in November. The four arrows on the right show that it is now resistance. The BKX was able to close above on Wednesday and Thursday, but fell back below on Friday.

Additional resistance in the area comes from the 50% Fibonacci retracement of the plunge down from the September 2008 peak:

So, instead of Blitzkrieg, there is more likely to hand-to-hand combat in the trenches – if the market can continue to rally here.

On the weekly chart, the BKX has managed to recapture the first Fibonacci retracement level (red line) of the bear market:

If the last few weeks of the pattern turn out to be a bull flag, then the 38.20% level (purple line) would be a target.

Everybody was expecting the earnings season to break the market higher, but that assumption has been called into question by the action at the end of the last week. So, now we have drama with the BKX at center stage.

Why is unemployment still rising? Besides the evil, traitorous, grand plan to export as many jobs as possible to Asia, and crush the American worker’s standard of living down to Third-World levels, listen to Lynn Tilton in this video.

Tilton is the CEO of a company that owns 73 small- and mid-sized companies. She says, that none of them can get business loans, and this lack of lending is forcing companies to liquidate every day.