The S&P 500 is hovering below a key level that could spell a sharp rally toward 1,100 or further weakness, Chris Locke, MD of Oystertrade.com Management, told CNBC Wednesday.
Video: watch the full Chris Locke interview
"We need to take out this recent high of 918 (points) … to confirm that we're off to 950 or 1,025 or levels towards 1,100," Locke said.
"If we can't get above this 918 level in the coming days we could very well see a set-back, back to some lower levels before coming up again," he added.
Locke is confident the S&P will enjoy a few weeks of strength after January as he thinks the "downside momentum is diminishing."
If the index did gain in the first part of 2009 it would likely resume its downtrend into 2010 and 2011, Locke said.
For the commodity market, Locke is expecting a good recovery year in 2009, starting from the beginning of March.
"We could actually see rallies (in crude oil) in 2009 to between $70 and $90 (a barrel), maybe a bit higher than that," Locke said, pointing out that key levels would have to be broken to support such a rally.