Holiday Cheer or Holiday Jeer?

Stocks have been immersed in flux in the weeks leading up to the Christmas holiday. We saw some positive movement in the market last week, but this week we’ve given back most of last week’s gains.

So, will it be holiday cheer or holiday jeer in the week between Christmas and New Year’s Day?

Of course, nobody knows for certain, but what we do know is that this market is trying to find its holiday footing, and so far that footing has been unstable at best.

Take a look at the chart here of the S&P 500 Index.

As you can see, we are now just slightly below the 50-day moving average (blue line). We broke above this mark briefly last week, but the move to the upside failed to take hold.

I think 850 is the key technical marker here. If we stay above 850, we may be able to start rallying again. If, however, we break through this short-term support level, we may find going back up to be a very difficult slog.

Whatever happens, one thing we know for certain is that we are not out of the precarious woods just yet. And even if Santa brings us a bull for Christmas, that bull will face a whole lot of obstacles as it marches into 2009.

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