Jeff Cooper says ...

Bullishly -- at least potentially so -- the S&P has offset the small sell signal that we spoke of the other day, the "tail" from Dec. 5.

As we anticipated in Monday's commentary, momentum would rear its head well before Friday's expiration. Now, the question is will we get a continuation of momentum above the important 1275 resistance? Remember that 1270/1275 S&P was a projected band of resistance bias over a month. Any continuation of the rally above 1275 suggests more blue sky into Friday's expiration, with shorts being shaken out along the way.

If the market can withstand what is many times a post-expiration hangover after the weekend and continue to advance, it opens up the notion of targets just above 1300 S&P.

Conclusion: With the S&P clawing its way up to the upper band of our resistance, follow-through is essential on Thursday and Friday. At the same time, do not get complacent. If this phase of the rally is largely driven by the push and pull of put and call premiums, then a break next week below our 1263 pivot must be taken seriously.