Will Santa Show up this Week?

By: Scott Redler

The market has been stuck in this upper channel for almost 2 months now. Stock selection–both long and short–has been profitable, while trading the indices has been frustrating. The S&P is now around 1,103. From here, the market needs a 60 minute close above 1,115 or a daily close above 1,119 in order to free up a larger move to the 1,127-1,135 area.

We will need the banks to wake up in order for a rally to take place. Now that all the gross-diluted money raises are out of the way, perhaps this sector that has lagged the overall move for the past 3 months can regain its leadership role. Key off on Goldman Sachs (GS). If it can break above $164-165.50 with POWER, then maybe the XLF can flex some muscle and help lead the broader markets higher. We continue to love BAC long against the $15 area.

Sector Rundown

• We sold gold on December 2nd at 1,210 and bought back Tier 1 long in the $1,080-1,120 zone. We will enter a Tier 2 macro long with either a momentum trade through $1,130 or a pullin back to the $1,070-1,080 area.

• Oil just had a small bounce–not so compelling right now. The OIH needs to consolidate.

• In tech land–We like AAPL if it can break its downtrend at around $196-197, and just maybe it can help out the NASDAQ. RIMM is back in the game–it needs to consolidate this earnings gap and then we will be looking for a trade above $71.60. AMZN had a nice pullin since everyone started riding the bandwagon–we are thinking a bounce is due. GOOG is still hanging tough and probably will see prices above $600 before year-end.

• The casinos are an avoid for right now.

• The agricultural group got smacked late last week, but GS came out to their defense today to give us a gap up open.

• Keep your eye on the dollar–we had a big bounce and yet the S&Ps are still only 15-19 handles off the highs. It’s good to see that the market did not fall apart with that type of move in the dollar.

Look for me on the Fast Money Halftime Report at 12:45 today.