The S&P 500 SPDR (ARCA:SPY) moved lower last week, but still remains above short-term support at $177.50. If it holds above that level the price action since November 14 is viewed as a consolidation, with the expectations of a pop higher over the next couple weeks. On the other hand, a drop below $177.50 signals a short-term (or possibly long-term) top is in place with the immediate expectation of a decline. The S&P 500 is trading near the top of a multi-year trend channel, so a correction here could push the price toward the channel low at $170 over the coming weeks. Sectors are a mixed bag. Ones that were performing very strongly, such as the Health Care Select Sector SPDR (ARCA:XLV), had the worst performance last week. With selector selection more difficult at this market inflection point, some alternative ETFs are considered, as well as relatively strong and weak stocks for short-term opportunities.

S&P 500 VIX Short-Term Futures ETN (ARCA:VXX) typically moves inversely to the S&P 500 SPDR, but not necessarily in terms of magnitude. If the S&P 500 breaks below $177.50 a rally above $48 in VXX is expected, with an initial target near $52.50. This ETF should only be used for short-term trading purposes, and only as long as there is selling pressure in the major indexes. An inability to gain traction above $48 indicates that speculators aren't concerned about index declines and moves lower in them are likely to fail. A rally in the S&P 500 will send VXX back toward the recent lows near $44, with the expectation of a further decline if the index sees new highs.

Lions Gate Entertainment (NYSE:LGF) has already been under strong selling pressure since the October high at $37.81. Consolidating just above $28 in the latter part of last week, the expectation is for further downside this week if the price breaks that minor support level. If the S&P 500 also drops this week, taking short positions in stocks that have already shown relative weakness should produce higher returns than shorting an index-linked product(s) itself. Lions Gate topped out several months before the S&P 500 in the 2007/2008 decline. Possibly just a coincidence, but with the stock topping out a couple months ago and the market at an inflection point this is one stock which presents some downside opportunity if the broader market experiences selling pressure, and quite possibly even if it doesn't. As a short-term target, $26 could be seen shortly. Targets can be extended lower though as long as the stock is making lower lows and lower highs.

Legg Mason (NYSE:LM) hit a fresh 52-week high at $41.51 on December 13, showing strength in the face of a bit of overall market weakness. In the short-term there is likely more upside if the S&P 500 holds above support and pushes higher this week. The next target is $43.25, which is within reach before Christmas if the price moves higher from here. A minor pullback to near $40 presents another buying opportunity, if the S&P 500 is also still holding above short-term support. For short-term trades, the stop-loss is just below $40. Even though the stock is strong, if the S&P 500 breaks lower, better to wait for a larger pullback than to buy near the high.

Daily Financial Bulls 3X Shares (ARCA:FAS) is a very aggressive way to play a bullish week in the stock market. This leveraged fund has large price swings and sharp price movements. Financials have been a strong sector over the last month, so it may continue to lead if the market pushes higher. One potential trade is to assume support will hold, buying near $81 with a stop below $79. If the price rallies above $85 (alternative entry) it's a strong signal the price will continue to rally above the former high, with an initial target at $87.75 to $89.  The less aggressive choice is to trade the Financial Select Sector SPDR (ARCA:XLF), which has a similar trade setup.

The Bottom Line

No matter what the market does, have a plan for what to do. Overall the S&P 500 is still in an uptrend, so with signs of renewed strength purchase stocks and ETFs that have been market leaders over the last few months. If the market breaks lower though, take short positions in stocks and ETFs that have already been showing weakness for the last couple months. The weight of the market is likely to push these stocks even lower over the short-term. This week is likely to determine if the S&P 500 is going to correct by breaking below short-term support, or hold support, signaling another rally before the end of the year.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

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