Monday’s stock rally brought ETFs tracking the S&P 500 back above the 200-day moving average after a brief foray below this closely watched technical indicator.

If the U.S. blue-chip ETFs can hold the line it would raise bulls’ hopes the market can enjoy a Santa Claus rally into the end of the year despite worries over the fiscal cliff and economic growth. The CBOE Volatility Index remains subdued and seasonal factors are in the market’s favor. [VIX ETFs]

Still, stocks tumbled in midday action Tuesday after Federal Reserve Chairman Ben Bernanke warned the Fed doesn’t have the tools to offset the damage of falling over the fiscal cliff.

Also, ETFs tracking other major U.S. equity benchmarks such as the Nasdaq-100 PowerShares QQQ (NasdaqGM: QQQ) and SPDR Dow Jones Industrial Average (NYSEArca: DIA) remain stuck below their 200-day averages after the November sell-off.

Yet there are some encouraging signs. For example, Josh Brown at the Reformed Broker blog points to a recovery in in small-cap stocks week, a high volume bounce in tech giant Apple (NasdaqGS: AAPL), and the recent outperformance of emerging markets.

ETFs to play continued strength in small-caps through the end of the year include iShares Russell 2000 (NYSEArca: IWM), iShares Core S&P Small-Cap (NYSEArca: IJR), Vanguard Small-Cap ETF (NYSEArca: VB) and Schwab U.S. Small Cap (NYSEArca: SCHA).