Listening to the commentary today, everyone (and I do not say the word 'everyone' lightly) did not trust today's up move. The bullish boys had a caveat, the bearish girls mocked the 'January effect' and everyone is just scared of the EU debt offerings coming up. There were technical situations that merit this caution. For instance, the action of the semi index today. In the AM it looked to like it was confirming the market push higher, but by the end of the day it was sitting on its resistance.
1. Earnings season is upon us. The trailing SP500 EPS for 2011 should be around $95-97. (This alone should push the SP500 to the 1300 level.)
2. Global PMI data pushed higher. The most interesting of the global PMI data was Australia and China. (The China 'hard-landing' folks, should be seriously dissecting those numbers.)
3. China will most likely continue its targeted easing. Something, most likely rate easing, maybe announced before Jan 23rd (their new year).
The above is a pretty bullish situation.
Of course the negative everyone is already scared about, is the EU bond auctions scheduled over the next few weeks. Will they be successful? If not, the above be damned. (But with the embrace of 'zero-risk' bonds and EU easing, imo, this fear is mitigated.)
If there is no auction drama over the next few weeks, the markets should climb higher. I think that leads to a set up where the VIX approaches the high teens.