Sustaining a gap open higher of 33 points to 1271-1272 will prove difficult today. While higher highs are expected, the opening range and high at 1271-1272 should prove as resistance for a spell while the market backfills to a support it likes ahead of tomorrows bullish spin from today's EU Summit and more positive expectations for next week's announcements. Keep in mind the back and fill may persist until Friday Morning's trade has priced in 1) personal spending and inc and 2) Mich sentiment.

So, looking down below today's opening range high:

One third of the 33 point gap = 11. And 1272-11 = 1260-1261. There is a notable shelf at 1260-1261 to consider on the 50x4 P&F chart.

Typically, the pit session has average true ranges of about 12-15 handles during stable markets, and over 25-30 points during volatile markets. 1260-1261 would be a minimum target expectation if the market stays below the opening range today. (Next targets above the opening range is going to be close to 1280 and 1287 (not shown). The average true ranges in the SP500 have been trending towards stability since peaking around 48 points on the day the US govt credit was downgraded back on Aug 8-9. Recent true ranges have been trending lower to about 25 points. Two-thirds of 33-34 is 22 handles and that would target 1250 if the entire true range was a backfill (not expected ~ some of that true range can expand above the opening range).

Other considerations to note. 1) the open of the year in the pit is 1263 which is 9-10 points below today's opening range. The pit session low so far is 1263.70, and there isn't really anything on the point and figure chart at 1263 to show support to backstop the yr opening price, so, the 1260-1261 makes more sense as the first reasonable intraday support and 2) the close of the year is 1253. There is a point of control support near 1257 for the bulls to keep the SP500 above 1253 unchanged on the year. 1257 would also be a 15 point range to the downside below the opening range, and as noted above, it stabilizing mkts, the SP500 ave true range is about 15 points.

Should 1257 fail, there is a swing low point on the P&F chart to lend support the yr close at 1253. That swing low occurred around 2 am, about the time the EU markets were opening, and thus is a key European investor confidence level which has only been boosted further by the breakout that occurred around 430 am. I would look no further than this 1253-1257 for the market to find support today.

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