Market Takes Heart; Bear Call Spread on FCX

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (Top Gun Options) -- The Bulls continue to rampage through the new calendar year, with 2012 so far providing Wall Street with one of its fastest starts since 1987. Still, the Top Gun Options trading team sees a number of obstacles remaining directly in the path of the upward trend.

The European Union sovereign debt crisis remains on the radar of Wall Street in a big way, though investors seem eager to focus on the improving metrics provided lately by both U.S. government reports and slightly better than expected fourth-quarter earnings reports. The Friday morning report released by the U.S. Department of Labor, indicating a drop in the unemployment rate to 8.3%, sent the market into a solid surge, where it remained for the most part throughout the day.

There seems to be a tacit acknowledgement by investors that, as long as the eurozone problems are reined in to a certain extent, perhaps defined by key EU leaders' continued search for suitable solutions, good news on the domestic front trumps the deeper fissures within the EU.

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For now, at least, the shorter-term trend is strong. On Friday, the Dow Jones Industrial Average attained levels not seen since May 2008. The Blue-Chip Index ended the week at 12,862, up 1.6%.

Meanwhile, the S&P 500 Index (SPX) did even better, as the benchmark index headed north to the tune of 2.3% for the week. The SPX now has risen five weeks in a row, as of last Friday gaining 6.9% this year.

Technically speaking, the SPX, which offers a better snapshot of the market than the narrower-based DJIA, has two strong characteristics going for it that might suggest the Bull Run can continue, or at least pause for a breather without too much retreat. First off, the SPX has broken through its 200-day Moving Average at the beginning of the New Year, and it hasn't really looked back since. In addition, in the process of the recent five-week run-up, the benchmark index has also broken above the psychologically important 1,300 level and has managed to stay there, aside from a single intraday probe to that line.