update

Here is a 30 minute bar chart showing the past two weeks of day session e-mini trading. I think the 1253 level is strong resistance because the March 2008 low was 1253 and was followed by a 200 point rally in the S&P.

This chart illustrates two other reasons for expecting resistance at 1253. First, the upper channel line of the rising, green dash trend channel I have drawn now stands at 1252. Secondly, a rally from the December 16 low which matches the size of the rally from the December 8 low (blue dash rectangles) would stop at 1256. So these shorter term calculations also suggest a top near 1253.

I think the drop from 1253 will be 20-25 points and that it will be followed by another rally to or a little above that top. But I also think that a drop of 50-75 points from the 1250-60 zone will start in January.

The S&P is likely to trade above the 1300 level by the beginning of April.