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What to Watch
The postponement last week of the debt ceiling debate removed one of the roadblocks to the stock market as the S&P finally overcame the widely watched 1,500 level. The higher stock market and the sharp decline in Apple's (AAPL) stock price have dominated the news.

I have been looking for the S&P 500 to challenge the 1,500 to 1,520 level and the high last Friday was 1,503.27. The renewed interest in the stock market has caused a sharp increase in bullish sentiment of individual investors. According to AAII, the bullish% surged from 43.9% to 52.3% last week with the number of bears dropping to 24.27%.

One should know that the individual investor is not always wrong as I have found a high level of bearish sentiment to be more reliable that a high level of bullish sentiment. For example, the recent higher readings were 55.88% on January 6, 2011, and 63.28% on December 23, 2010. The S&P 500 had a low of 1,205.72 on December 20, 2010, and reached a high of 1,422 on April 2, 2011.

Last week the number of bullish and bearish financial newsletter writers was unchanged at 53.2% bullish and 22.3% bearish. In April 2011 the number of bullish hit 57.3%.

The attitude of the financial press and the individual investors has certainly changed from early January when I felt the market would be Scaling the Wall of Worry. Even though I am cautious about the market at current levels, there are still some stocks that look attractive at the right price.

Before they reported earnings last week, I recommended buying Microsoft Corp. (MSFT) if it dropped on a reaction to disappointing earnings. So far the buying level has not been hit but risking 5% to buy a stock close to year-long support that yields 3.1%, I think, puts the proper emphasis on entry level and risk. These are what I feel will be the key guidelines to follow in 2013.

In addition to searching for good risk buys, I will also continue to recommend taking profits on those positions that I feel are the most vulnerable to a correction.

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The daily chart of the NYSE Composite shows the sharp move above the 2011 high of 8,718.25, which now becomes first support. The quarterly R1 level has been reached with the daily starc+ band now at 8938 and the weekly starc+ at 9040. It is still well below the all-time highs of 10,387 that was made in October 2007.

The NYSE Advance/Decline broke through resistance, line c, in December, which supported a bullish stance going into the start of the year. The A/D line continues to rise strongly and is well above its WMA.

There is first support now at 8,692-8,718 and then the uptrend in the 8,600 area. This is about 3.2% below the current price.

S&P 500
The Spyder Trust (SPY) finally moved above the $150 level last week as it gained close to 1% for the week. As I discussed before, the 100% or equality target is at $150.70 with the quarterly R1 resistance at $150.58. The longer-term trend line resistance, line e, is now at $152.40.

The S&P 500 Advance/Decline is rising sharply as it has moved above the highs from April 2012, line g. This is a bullish sign for the intermediate term. Its WMA is also now rising strongly.

There is first chart support now at $147.60-$148.60 with the rising 20-day EMA $146.97. This is about 2% below Friday's close. There is longer-term support and the quarterly pivot  at $142.64.