I've spent the last couple of months talking about how to find evidence that things had changed for the better for the market. Well, I think we finally got it between Thursday and Friday of last week. All the bearish stuff that had been plaguing stocks? I think the bulls broke that grip. More importantly, I've got some pretty specific reasons why. No fanfare here...let's just dig in.    Momentum Shift I'm a big fan of moving averages. They're lagging indicators, but they're also undeniable. Did you know on Thursday all the major indices closed above the 20 day moving average line for the first time since mid-September? Did you know on Friday the market made its second consecutive close (and higher close) above the 20 day line for the first time since August?  Something had to change - in a bullish way - for that to happen. It's not just the market though...the VIX is giving us the same shift in direction. A few days ago I also pointed out how the CBOE Volatility Index (or VIX) had been finding support at the 20 day moving average rather than falling under it when it had opportunities to do so. As it turns out, the VIX fell under its 20 day moving average line on Thursday, and closed even lower again on Friday. This is essentially a mirror image of the market, and saying the same thing that the market's move above the 20 day moving average is saying...that momentum has shifted. I have to take both at face value. With all that being said, I would still caution anyone against digging in too deep here. Today's been a relatively shaky start to the week, and I still foresee a lot of volatility... it just so happens I think most of it will be bullish volatility. I'm not getting married to the idea yet though.  I have two key concerns right now.... My first concern is the market's recent penchant for lousy Mondays. I pointed this out a couple of weeks ago. Since then, Monday's have been mixed, and the jury is still out on today's action. However, I won't be surprised in the least to see an implosion today. Call it Murphy's Law, to unwind a perfectly good rally attempt that came it a very opportune time. If Murphy's Law doesn't kick in, I'll be pleased.  Just to be clear though, a rough Monday doesn't necessarily mean more bearishness is on tap. It just means Monday was bad. Though we've had more bearish days than bullish days since August, the really bad selloffs have almost always been met with very strong rebounds the very next day. So, don't get too frustrated if we see double-digit losses on Monday...it could be a different story by Tuesday.  My second concern - resistance. The S&P 500 is contending with a well-defined resistance line at 985. That was Friday's high, but it was also the high for three days in a row a couple of weeks ago. We need to see that hurdle jumped before getting too excited. So, at this point I'm advocating a phase-in strategy. Start small, and add long positions as the market moves higher. If the market doesn't move higher, then don't add anything new. Along those lines, let's talk about the big milestones or tripwires we need to be thinking about. I'm primarily using Fibonacci retracement lines for this exercise, since any other meaningful support/resistance level has been obliterated over the last couple of months. Assuming the S&P 500 makes it past 985, there's a big retracement level around 1020. Beyond that, look for turbulence around 1127. If that line is breached as well, the next stop is 1300...the highs hit in August before everything fell apart. So, let's see how it all plays out. Just in the interest of fairness, I'm putting some of my money where my mouth is. This isn't an official SCN trade, but I'm buying some index call options today. I'll buy some more if the S&P 500 can crack 985.    Odd & Ends None of this has anything to do with my analysis above, but you might find some interest in these factoids.... October of 2008 was not the worst month ever for the market (though it was on track to be at one point). It was the eighth-worst month since 1930.  The S&P 500 lost 20.9% for the calendar month, and had been 23.6% in the hold at one point.  The U.S. Dollar, even with last week's dip, is still around two-year highs, and still in an uptrend.  Last week's big winning sector was the consumer discretionary sector. The top industries were homebuilders, gambling, and specialty finance. None of those particularly indicate investors are concerned with safety over speculative opportunity right now.  With things very likely to be different over the next two months than they were over the last two months, I think now's the time to start looking for the hottest of the hot spots (and hot stocks). We'll do as much of that as we can in the newsletter and blog. The earliest part of any recovery is almost always the biggest, fastest profit opportunity.  One last thing...most of you have a chance on Tuesday to participate in setting the course for your country. As far as I'm concerned you can vote however you want to - just be sure to go vote.