As the holiday season gets underway, we're starting to get more positive price action in the market.

It's taken a couple of months, but the indices' 50DMAs have finally caught up with all the selling. This week the market met resistance there as it did in August/September when it killed that rally attempt and sparked a precipitous 3000+ drop in the Dow.

Certainly fundamental conditions are still in the crapper, but there are reasons to be hopeful for further upside movement. We've seen more positive price action since Thanksgiving week. Given the clear divergence between volume and price that week, it's no great surprise that folks came back in to the office on Monday still stinking of turkey and ready to sell. However, the next two days saw higher volume gains (triggering the IBD follow-through criteria for a confirmed rally). Since then we've had a few low volume down days with subsequent higher volume up days. When the market bumped against the 50DMA, it fell back, but this past week's declines have been in below average volume. When the market tried to put in a bottom in October, it failed to generate this kind of positive action that the potential bottom in November has.

Sentiment indicators are also showing some positive signs. The new lows made in November failed to be confirmed in the VIX and Pull/Call ratio.

The VIX failed to make a new high or find support at its 10DMA which it followed straight up during the "Great Selloff"^TM. In fact, in December it has been finding resistance at this line.

Though we did see extreme spikes in the Put/Call ratio, its 10DMA (which I've found to be a more reliable indicator) failed to impress.