Bulls push stock indices into weekly resistance

Housing Optimism

The latest housing data has been promising for those looking for an end in sight to the housing crisis. According to the National Association of Realtors, existing-home sales were up in December to an annualized rate of 4.61 million units, compared to 4.39 in November. Sales for the year were up 1.7% compared to 2010. Over 20% of the sales are to investors and foreclosure inventories remain high, but it's one of the first signs we've seen that stability is starting to return to housing.

Getting Technical

The markets themselves have continued to climb this year, posting another weekly gain last week. The momentum in the market, however, remains weak. The indices have pulled higher, but continue to display a lot of price overlap from one session to the next except in the Dow. Nevertheless, there are no major reversal patterns forming right now to suggest that the market will not attempt a stronger test of last year's highs yet this month. The S&P 500 ($SPX) still has room to move and even the DIA is still short of that price level. A solid break of that price zone, however, is extremely unlikely without the market first offering another correction on the weekly time frame into next month.

S&P 500 (Figure 2)

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