- Technical Commentary -

December 16, 2009 (FinancialWire) (By Joe Duarte) — Secondary offerings from Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC) taxed the meager means available to the reduced trading crowd on 12-15. But despite the downdraft, the S&P 500 (SPX) still held above 1100.

So what’s it all about? The market is trying to decide whether it’s going to finally deliver the Santa Claus rally, or if it’s going to worry about politics, the economy, and what lies ahead for next year. If it chooses the former as a trading catalyst, we could see modest, and possibly fairly good gains in the next couple of weeks. If it chooses the latter, we’ll get more of what we’ve been getting lately, not much, and lots of it.

What’s there to worry about? Taxes, taxes, taxes, and yes, more taxes in the ways of fees, regulations, loopholes, mandates, and taxes. Did we mention taxes? You got it, taxes and at some point in the future the draining of the excessive liquidity in the market from the Federal Reserve. The latter won’t come right away, but you can expect the talking about it to start as early as Wednesday’s FOMC statement after the two day Fed meeting.

Technically, the market needs to take out the 1120 area convincingly so that stocks could climb for the next week or two in the traditional holiday fashion. If you’re looking for something positive, consider the fact that the small stocks have improved their performance lately, even though the blue chips are still in the lead as far as making new highs for the year.

What’s the take home message? Make no big bets. Take no big risks. And remain patient while holding on to what’s working.

[Go to http://www.financialwire.net/?s=joe+duarte to see more commentaries by Dr. Joe Duarte.]

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