Deron Wagner writes that until the S&P 500 convincingly closes outside of its whippy, sideways range of recent weeks, it's best to maintain smaller than usual share size with all new positions.

The S&P 500 has started to close the opening gap of December 1. If the gap is filled and the index continues lower, next stop would be support of the November 27 and November 30 lows.

the trading-range pattern of the S&P 500 over the past several weeks, it would not surprise Deron Wagner to see the index now drift back down to support of the 1,083 area.

Traders need to be prepared for the possibility of a few down days that take the S&P 500 index down towards lower channel support.

As long as the S&P remains within the confines of its channel, entering new positions on either side of the market could be tricky.

The main stock market indexes have been in a choppy, sideways range for the past two weeks, and last Friday's losses puts the major indices near the lower channel support of that trading range.

Goldman Sachs (GS), a barometer for the S&P 500, has been selling off for the past two weeks, and is already testing its October 2009 low. A break of that low in Friday's session could weigh quite heavily on the S&P.

While the S&P, Dow, and Nasdaq are consolidating near their recent 52-week highs, the small-cap Russell 2000 still appears to be in trouble.

Deron Wagner believes the current environment is most ideal for new trades with a very short holding time of one or two days.

Because the S&P 500 has ignored the formation of bearish Head and Shoulders patterns several times in recent months, powering higher instead, Deron Wagner doesn't have much conviction this pattern will follow through to the downside.