The indicators I look at point to a mixed picture in terms of sentiment, while seasonality is a major positive. The Investors Intelligence numbers were a positive for the bulls until now, but an increase in bulls and decrease in bears this week has turned this indicator neutral. Normally, neutral sentiment at year end is a positive but I believe the worsening situation in Europe offsets this.
The S&P 500 has been stuck in a range for the past few weeks between 1220 and 1290. I believe it will be very difficult for the bulls to break out of this range without some sort of a resolution in Europe. I also believe it will be difficult to break down because when push comes to shove the EU will intervene.
My plan is to trim positions towards the top of the range and add closer to the bottom, while maintaining a net long position. The reason I want to maintain a net long position is because ultimately I believe there will be a rescue. Just don't hold your breath.