With the festive season behind us, we are now ready to continue looking for new trading opportunities without the light volume conditions that make price swings less meaningful.

So what can we expect from the first few days of 2008? The short-term technical outlook is positive, and if the economic indicators released this week are not too disappointing, we could see a resumption of the rally that extends beyond the first few days of the new year.

Currently, short-term breadth, measured by S&P 500 stocks above their 5-day moving average, is at an extreme low. This indicates that, at worst, we could see a small bounce soon, and at best, we could see a resumption of the upward move from December lows that puts the index above the previously discussed resistance levels.