Markets Creating Classic Bottoming Formation

I guess everyone, including me, is asking the question, "What the hell is going on?"  Since my last update, not a whole lot has happened here, even though it seems as if it has.  The S&P broke down through its October 10 lows on November 20 and closed above those Oct. 10 lows on Nov. 24, printing what looks to me like a classic "shakeout".  This market is still using the October 10 lows as major support.  Remember, that low came in with record volume suggesting there are a ton of buyers at that level.

I am still looking at this market as being in a range.  The October 10 lows represents the bottom of the range while the October 14 highs represents the top of that range.  We saw a high volume capitulation through the range, quickly reversing and reclaiming the critical October 10 lows expeditiously.  Ranges can take quite a long time to develop, they will test our patience and break your will while you wait for them to play out.  There is alot of emotion being traded within the aforementioned range.  This can be translated as the transfer of weak to strong hands.  Fear is most likely being bought by value players here.  They are accumulating their positions for the next move higher and when they are done, they will let it run effortlessly.  This is how criminals operate.

With this being said, the Nov 21 lows have to be held or were going into the 6500 region on the DOW, 650 to 600 region on S&P 500.  On the upside, I want to see 900 broken on the S&P to signal a continuation move to the upside on the short term at least.  900, 1000, 1100 are next levels of resistance.  A high volume acceleration through 1050 area is what the bulls want to see to signal a larger upmove in progress.  That could land the S&P 500 into the 1250 area.  Again, one step at a time.