The S&P 500 is about to reach a key inflection point. How it reacts there will probably set the tone for the first 6 months of 2013. Once the S&P reaches this “fork in the road,” I expect it to turn down.

Regardless of ones bias, you can’t be blind to other indicators and two of them are quite bullish.

Santa Claus Rally (SCR)

The SCR covers the last 5 trading days of the old year and 2 first trading days of the new year. The 2012/13 SCR delivered a 2.0% gain for the S&P 500, a 1.5% gain for the Dow Jones and 2.6% pop for the Nasdaq.

Since 1950, a positive SCR for the S&P 500 has resulted in full year gains 62.8% of the time.

First 5 January Days (F5D)

A lousy performance during the first 5 trading days of the year is often viewed as an early warning signal for the entire year. It doesn't like look the F5D will be waving any red flags this year. Unless the S&P closes below 1,426.19 today, the F5D will be positive.

Used as a barometer, the first 5 days have correctly predicted the full year outcome (up or down) 62.8%.

Santa Claus Rally + First 5 Days

What happens when we combine the SCR and F5D barometers? Since 1950 the SCR and F5D have been up 21 of 24 years for a success ratio of 87.5%.

Based on this, the odds for 2013 ending up in the green is 87.5%.

Once again, I don’t buy those odds, at least not yet. I am waiting for the results of another indicator, one with a 92.3% accuracy ratio. I'm also waiting how the S&P 500 reacts at its fork in the road point.

The results of the 92.3% accurate indicator and the level for the S&P 500 inflection point will revealed by the Profit Radar Report.