I don't trust the S&P's breakout above 900 over the holiday and neither should you.

While most of us have had better things to do the past two weeks, a couple workaholics have been trading and pushing the major indices above their 50 day moving averages to close out 2008. This average has provided strong resistance all year. The brief rally in April pushed the market just high enough to touch the 200DMA and dive, though admittedly the difference between the 50 and 200 levels at the time was quite small compared to now where the Dow could rally another 2000 points before hitting its 200DMA.

Almost all of this price action is in below average volume. December 16th's accumulation day is the rare exception, but it was followed by distribution on the 19th.

As I've said in previous posts, we seem to be putting in a bottom in terms of price action as well as in sentiment indicators. The VIX has peeked below 40 for the first time in three months and the Put/Call Ratio (smoothed) has pulled back from extreme oversold status.

In fact, the ratio of puts to calls is gliding into overbought territory (for a bear market rally) as the S&P closes in on a retest of 1000. I'm a seller there and you won't find me eager on the long side until the catalyst for these nascient rallies isn't the Great Socialist Agenda™.