Nothing serious happened at the technical level but bears have proved to themselves that a serious move down it's possible. This is probably the most brave attempt to move the market down since November. SPX moved briefly bellow EMA 50 and came as close as 5 points to SMA 120. However, bulls recovered nicely and pushed the index above EMA 25 so the market remains overbought on short term and it is vulnerable to another drop.
In terms of momentum, DMI looks bullish on both daily and weekly chart. I didn't want to complicate the "story" and I never mentioned this but I must say I am also watching DMI on 4 hours chart. This time frame is a good compromise between daily DMI that switches sides a few days after EMA 25 crosses EMA 50 and is a good CONFIRMATION indicator and DMI on hourly chart that is actually too choppy to be useful in any way. DMI on 4 hours chart is a bit more sensitive than EMAs crossing (and therefore generates more whip-saws) but it's pretty reliable in terms of sensing a change in a trend at the right time. Looking at DMI on 4 hours chart you can see that is pretty much neutral right now, for the first time since turning positive on December 1st. While I still rely on EMAs crossing and SMA 120 I can't help seeing this early sign that the bullish momentum is fading.
In conclusion, let's take the market as it is, bearish on short term, bullish on intermediate and long term. However, keep in the back of your mind what I said about the DMI on 4 hours chart and some other weaknesses on the short term such as a break bellow the "rising wedge" I mentioned yesterday.
If you are on the long side but still believe this market has more room to move up I would suggest you to protect your portfolio with a few "puts". For example if you have 100 shares of QQQQ (for a total sum of $5,600) buy one "February, strike 55" put for 100 dollars. After such a long leg up "puts" are very cheap. If you wake up one morning, next week, and see SPX dropping 20-30 points you are going to lose more than 100 bucks. You may have the bad surprise to see you are still owning your shares at say 52 despite the fact you had a stop at 53 because the market gaped down to 52 overnight. Protecting your portfolio with options it's a little bit expensive but you are sleeping better at night because you are capping the losses. The most annoying thing about using stop-losses is to have a single volatile day (not to mention a "flash crash") and see your shares sold at an inferior price, then to see market going up again. A bad experience like this makes many people to stop using stop-losses at all, and trade with absolutely no protection, obviously not a good move. Having a put for every 100 shares you own it's an insurance, you have insurance for your house, for your car, why not one for your stocks?
Have a nice weekend!