Fridays 14th December '12 setup

 From the bigger picture we can see the channel clearly broken to the downside yesterday - this is likely due to roll over / options expiration / holiday reversion to the mean (1412.5 POC cyan line on VP). I believe we would need to see a break of the long term support (blue parallel line) to see a failure of the current trend. Consider that the POC is the area at which most trade has been conducted and therefore by extension the value at which most traders are comfortable. A consideration as we approach the holidays.
Another consideration is the fact that many bigger market participants will be reducing exposure (covering longs) and will not be re-opening positions till the new year leading to what appears to be the start of a 'drop and pop' type setup which, in the new year and barring catastrophe over the holiday, may see us breaking the upper long term trend line and making new highs.
Either way our job is simply to continue taking opportunity as we see it until we ourselves also decide to break for the holiday.

Close-up

My inclination is that today we will see a rally back to the point of the break down or trend line break (green circle), shaking out weaker shorts (this is a classic pattern) and then we may see a fall to the long term support area (blue parallel lines) - this also coincides with the POC and in all represents about a 16 point range, same as yesterday and the 5 day ATR is 13 (in round numbers) so not a massive extension of the norm.
The yellow lines are S&R over the longer term and are at 1415.50, 1423 and 1429.25. Just areas that will provide trade opportunities today.

Only major influences on the market today would be a proclamation of a resolution to the 'Fiscal Cliff' debacle. Whilst announcements (CPI @ 7:30 cst and Ind' Prod' @ 8:15 cst) have the potential today to move the market I don't believe they will do anything other than support the prevailing short term momentum.

Barring any change in circumstances between this post and the open I will be short today from 1429.50.