Yesterday, the Swiss National Bank (SNB) made a few interesting comments while it actually took its first step towards monetary policy normalization by withdrawing its corporate bond purchase facility.

Notwithstanding, it kept its interest rates unchanged. Chairman Jean-Pierre Roth said that “expansionary monetary policy cannot be maintained for the next three years because price stability will be compromised in the longer term.

In my opinion at least, the most important part of the latest SNB’s policy stance was its stated intent to “act decisively to prevent any excessive appreciation of the Swiss franc against the euro.”

It should be noted that the word “excessive” has been absent from the Bank’s previous policy assessments exactly at a moment we saw the first indications that inflation re-appeared, albeit timidly, in Switzerland in November, after being absent for eight months.

Yesterday’s SNB policy statement also spoke about of the risks surrounding its inflation forecasts and hence the lingering risks of deflation. Indeed, the Bank expects average inflation of just 0.5 percent in 2010 and 0.9 percent in 2011 after a fall of 0.5 percent this year, while the economic improvements that have been recorded since its last policy assessment in September have only met expectations, which is why their latest forecasts remain broadly unchanged.

It would not take a marked deviation from the economy’s current course for inflation to fall short of the Bank’s expectations and hence for deflation to rear its head once more. Jean-Pierre Roth said: “A swift correction in monetary policy would be precipitated since the inflation outlook is still associated with downside risks.”

In understandable English that means the Swiss National Bank remains resolutely on deflation watch. But to me, it’s Roth’s comment on the franc that remains the most important: “An appreciation of the CHF against the EUR would run counter to the relaxation in monetary conditions brought about through the interest rate channel. This is why the SNB will continue to act decisively to prevent any excessive appreciation of the Swiss franc against the EUR.”

This means that the Swiss National Bank will not target the dollar but let in fact the euro do the work.

Also, this morning on the markets and especially on the S&P 500 I want to make the following comment: We now have had four gap-ups in five weeks’ time and the S&P 500 ETF (SPY) has held support. That indicates the medium-term trend remains up. SPY is consolidating, support is holding and seasonality favors the bulls.

No doubt, investors should keep seasonality in mind but at the same time shouldn’t overlook the charts at all. In the last four weeks, SPY cannot seem to close above 111.5 or below 109.

On a closing basis, these are the levels to watch for a range break. On the 60-minute chart, SPY broke above resistance at 110 to reverse the downswing within the trading range; this range has a slight upward bias.

After the morning gap-breakout, SPY consolidated with a falling flag of sorts. No follow-through may seem bearish, but the morning gap-gains did hold and this is more bullish than bearish.

Complicated, isn’t it? With the consolidation looking like a small falling flag, a break above 111 would be the next bullish trigger that would target a move to resistance in the 111.5 to 112 area. Failure to follow through and a move back into the gap zone would be negative. Therefore, a move below 110.3 would call for a re-evaluation of this breakout.