There is a lot going on in the news as of late, and the expiration of the Bush tax cuts looms large on the minds of many, particularly small business owners. So the real question becomes, what should traders be watching or paying attention to before the light-volume Thanksgiving week? The answer is simple: Watch the tape! The market will provide plenty of clues, and it will eventually tip its hand. Experienced traders will wait for this process to unfold.

At this point in time, it is a bit early to begin making predictions as to which direction the equities market will go. What we do know is that the market was oversold in the short term, so this could be a pause before prices turn lower. On the other hand, this could be the beginning of another bullish move breaking recent highs on its way to a Santa Claus rally.

My stance is neutral at this point in time. S&P 1,200 should offer significant overhead resistance, while S&P 1,170 / 50-period moving average is near-term support. The chart listed below illustrates these key levels:

If the index were to break out above S&P 1,200 on strong volume, it is likely that we will see a retest of the recent highs around the 1,220 area. Consequently, if it tests the S&P 1,170 area and fails, it will likely be magnetized to the 1,140-1,150 area. We will have our answers in due time, but until a definite direction is known, patience is warranted.

Treasuries

The ProShares UltraShort 20+ Year Treasury ETF (NYSE: TBT) bounced off of the $36 level and put on a short-lived rally only to settle toward the bottom third of its recent price range. After the recent breakout, it would be constructive to see TBT consolidate before confirming a direction.

The chart below shows the key levels on TBT:

U.S. Dollar

Instead of illustrating a gold chart, let us focus our attention on the U.S. Dollar Index. The chart below shows the dollar has pulled back and is now testing the 50-period moving average. I am anticipating a retest of the recent breakout over double-tops and this key level is illustrated below. If support holds firm, higher prices for the U.S. dollar in the near term will be likely.

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