After a strong opening that took the Dow (DJI) up 200 points in the first hour on Friday, the market faded and sold lower for the remainder of the session. But one of the big concerns — the future of the Big Three automakers — was resolved early in the day by the decision of the White House to provide $17 billion in loans and pass on the problem to the next administration.

Both Ford’s (F) and General Motors’ (GM) stocks rose on the announcement. Ford gained 3.9% but General Motors was the big beneficiary, rising 22.7%.

Other than the Detroit auto news, there was little more to move the markets. What was touted as a potentially volatile session because of the expiration of four different options series (quadruple-witching) turned into a high-volume day of churning within a narrow band. After noon the Dow traded within a range of just 140 points.

Financial stocks were generally lower following a Standard & Poor’s credit-rating cut on both U.S. and European banks.

At the close, the Dow Industrials (DJI) was off 25 points at 8,579, the S&P 500 (SPX) gained three points at 888 and the Nasdaq (NASD) rose 12 points to end at 1,564.

But even with volatility low, volume was high. The New York Stock Exchange traded more than 2.4 billion shares, with advancers ahead of decliners by 5-to-3. On the Nasdaq, 1.3 billion shares crossed with breadth at break-even.

For the week, the Dow fell 0.6%, the S&P 500 gained 0.9% and the Nasdaq rose 1.5%. For the year, the Dow is down 35.3%, the S&P 500 is off 39.5% and the Nasdaq is off 41.0%.

Oil for February delivery, which is now the “spot contract,” rose 69 cents, closing at $42.36 a barrel. The Amex Energy SPDR (XLE) fell 31 cents to $46.

The February gold contract ended lower for the second day, down $23.20 at $837.40 due to a stronger dollar. The PHLX Gold/Silver Index (XAU) rose $1.89 to $112.75.

What the Markets Are Saying

Bond yields have fallen to record lows and oil is trading at five-year lows. Mortgage rates in parts of the country are reportedly below 5%, and some think that they will get close to 4% by spring. Perhaps these are the positive factors that have enabled the S&P 500 (SPX) to hold tenaciously to the 810 to 1,010 band of trading in place since early October.

But the negatives (no need to spoil pre-Christmas spirit by repeating them) are huge and reasonably outweigh the positives by many times.

However, to this technician, who tries desperately to ignore the tedious detail of fundamental market analysis and economics, the bottom line is that every major index is still in a major decline. The intermediate trend is down, as well, and is defined by a channel downtrend with highs at SPX 1,044, 1,007, and 919 and lows at 847, 819, and 800 (Nov. 20 and 21 lows are emotional out-of-the-pattern phenomena).

The short-term trend is up but its failure to convincingly close above the 50-day moving average now puts even that trend in doubt.

Such an approach, which I call reactive, as opposed to predictive analysis, depends upon the markets and their past history of indicators to direct our investments. I took this path many years ago when it dawned on me that Wall Street analysts had a very limited ability to predict the price of a company’s stock and that they were often most bullish at the top of markets and most bearish at the bottoms — much like the public investor whom they tended to deride.

Some readers, and even clients, have asked me questions about what industries or economic trends will guide our investments next year or in the next cycle. I usually have no answers to give except that I will consider major trends that lead me to new sectors.

For example, I consider the following statement to be extremely important: “Obama plans to push infrastructure spending.” This leads me to consider those industries and sectors that could benefit from a rush of heavy government spending, but when the time comes to put money to work, I’ll drop back to the trends that are revealed by solid chart analysis and the study of sentiment and internal indicators.

Here is an excerpt from my Daily Trader’s Alert from Oct. 12, 2007, one day after the Dow’s high water mark:

“Speculation seen by the advance of the techs and Nasdaq versus the New York Stock Exchange stocks, much larger volume on than Nasdaq than the NYSE by 152% in the last three weeks, along with a rush to buy calls on the open versus puts all points to over-speculation.