Bulls & Bears at a Potential Pivot - Here's a Map Believe it or not, the market actually gave us some gains last week. That makes it.... a whole one week in a row. Did you know the S&P 500 hasn't made two consecutive weekly gains since September? As we've been saying more than not lately though, this most recent bullish effort really is a little different than past efforts. We'll get to that smidgen of hope in a second.  In the meantime, what a week! We heard about Bernie Madoff's bizarre story, Blagojevich's fate became pretty apparent, the Senate rejected the automaker bailout, and the Treasury assured us they'd be bailed out anyway (if needed).  How stocks rallied in the face of that news is surprising on the surface, but not surprising at all in the grand scheme of things. Like I said in a December 5th blog entry, investors want to be buyers here. They're not worried about all the landmines and pitfalls anymore - they understand all the problems. They've just weighed the odds, and decided the values are worth the risk. That's why we continue to see so many late-day rallies (like we saw on Friday). Anyway, I blogged some thoughts on Madoff, and went on a bit of a rant regarding the Treasury's override of the Senate's decision. Be sure to check 'em out if you didn't see those thoughts, since I don't have the time or space to detail them today.    The Nitty Gritty The bulls were on the verge of being euphoric after Monday. By Friday though, waking up to see the futures deep in the red was a complete reversal of fortune. Great! As usual, a pivotal point for the bulls was up-ended by a dose of bad news that came right before stocks were finally going to get traction. The media was calling for one of the worst days the market had seen in a long time. Funny thing though... stocks actually ended in positive territory Friday despite having every reason not to.  While I've got some thoughts about what's next (or at least what to look for next), I want to preface all of this by saying don't get too optimistic, and don't get too pessimistic. We're still taking things one-day-at-a time, because frankly, even the market's undertow - which is what we're interested in - is a bit undecided right now That's why we're also going to literally dissect today's chart.  The Bullish  Support at the 20 day moving average line. See the thin blue line on the chart? The SPX is above it. No big deal - we've been above it before in recent weeks. However, we actually found support there on Friday... for the first time in a long time.  The first higher high and higher low in a long time. Last week's high of 918 topped the high of 896 three weeks ago, and the low of 816 from two weeks ago was higher than the low of 741 from four weeks ago. Translation: The bulls are fighting back a little harder than the bears are now.  Volume, sort of. Though we've not seen an abundance of buying volume yet, we're at least no longer seeing a complete lack of it. [This isn't shown on this chart, so I'll add volume data the next time we look.]  The Bearish  Four straight days of lower highs. The buyers totally faded after Monday's pop, just a hair away from an explosive upside move. The VIX still hasn't actually stared to trend lower. I thought we might finally crack that support line (black, dashed) on Thursday, but no such luck. We're still positioned to do so though. That lower Bollinger band (20 day) still looms as potential support.  Resistance at the 50 day average line. That's the purple line on the chart. What you can't quite see is how the market hasn't been above its 50 day average since August. So, to see it even pressured now is a clue of a potential shift in momentum.  The Lines in the Sand So what's it going to take for me to get fully bullish? Two simple hurdles have to be jumped:  The 50 day moving average line. It's at 910 right now, so any close above there would actually be a huge feat for the market. The VIX's support at 53.0. That's where the dashed line is resting right now. It's clearly been a problem since early November. If the VIX can move under it and keep driving the lower Bollinger band even lower, it will also be a strong indication of a longer bullish trend.  I know moving averages are a wildly-simplistic tool to be using, but in my experience, the simpler, the better. There's no "should be" or "shouldn't be" to moving averages - they just tell you what the market is doing. And, that's why I love to use them as indicators.    Last Thoughts Last Monday morning I cautioned you that the first day of the trading week had generally been very bearish since early October. Of course, Murphy's Law kicked in, as Monday of last week ended up being the best day of the week.  Though the odds were defied then, I still want to remind you that for some reason, Monday's are particularly vulnerable. So, don't be surprised - and don't freak out - if the coming Monday follows the pattern of the recent norm rather than prove to be an exception. As long as the bulls can fight back and bring a quick end to any selling effort later in the week, we continue to have a good chance at more bullish gains. I think 818 is a key make-or-break level.    Coal Reignited This certainly isn't the kind of thing the media is going to cover - particularly when the Blagojevich debacle is just getting juicy - so I'll bring it to your attention .... coal stocks are starting to smolder again.  Could it be an omen of a fully-stoked fire? Methinks it could be, which is why I want to put the industry back on your radar. (I put it on your radar back in September, but never got a chance until now to follow up.)  Just so you know, coal stocks are well up this week-to-date. That's not a big deal, as a lot of groups are up this week. However, there are two key points to make about coal stocks.  First, it was THE leading group for the week, and second, these stocks may be waaaayyyyy undervalued. They took more than their fair share of drubbing since June, so I have to wonder if a recovery is going to be particularly strong. I think it will be - it has been so far anyway.  Click here to see the chart of the Dow Jones Coal Index... for the first time in months we're seeing higher highs and higher lows. It looks a little like the gain over the last few days may be pushing the chart's limits, so I expect a small pullback from here. As long as we don't make a lower low though, I think this is something that's more than a little interesting. In fact, as long as the 20-day line (blue) holds up as support, I'll likely buy on a dip. Why there? That line has been a big factor - bearish and bullish - for months now.  I also wanted to mention Arch Coal (ACI). This is an idea we were kicking around a few days ago as a possible 'official' site trade. We opted for the ProShares Ultra 500 ETF (SSO) instead, as we felt better about a market call than a sector call. However, we may add ACI to our official pick list soon ... if this chart does what I think it's going to do. So, keep that one on your back pocket, along with the Market Vectors Coal ETF (KOL). Either have a lot of potential.