Wednesday, January 25, 2012

Market Stage:

60-day charts with a 20-period SBV are now showing flat SBV oscillator readings. The following SBV values were recorded at session's end: plus 14% on the S&P 500, plus 19% on the DJI, plus 4% on the NASDAQ 100 and plus 19% on the Russell 2000. Flat SBV readings suggest possibility of changes in trend, however, SBV readings are at high positive levels. Furthermore the odds are on the bullish side. We will continue to monitor this chart setting in order to determine at which point SBV oscillator readings start to decline; this might then suggest increased odds for a coming move to the downside.

1.5-year charts with a 10-period SBV are showing flat SBV oscillator readings. The positive SBV values seen on this chart are bullish. Overall, this chart reflects bullish longer-term market sentiment.

Market Performance:

Short-Term Outlook:

In previous short-term outlook, we had suggested: " 30-day charts are showing advancing SBV oscillator reading as well which would suggest the possibility of having positive trading session tomorrow." - Today, the major indexes gained ground.

5-day charts (1 bar = 5 minutes) with a 20-period SBV are showing advancing SBV oscillator readings at session's end. Positive money flow on this chart would suggest the possibility of positive trading tomorrow after the market open. 15-day charts (1 bar = 15 minutes) with a SBV(16) and 30-day charts (1 bar = 30 minutes) with a SBV(13) are showing positive money flow (advancing SBV) as well. Overall, these charts are in favor of the bulls.

It is worth mentioning about strong output of bullish volume during the today's afternoon trading. While the volume is not strong on the daily charts, on the intraday scale it is quite big and it may affect short-term sentiment. In addition today's trading has added to volatility. Furthermore, we would not relay strongly on the positive outlook for tomorrow. We would monitor 30-day charts more closely, as change in the money flow direction may suggest increasing odd of the correction down.

Financial Press Overview:

From Reuters:

Federal Reserve Chairman Ben Bernanke said on Wednesday the central bank was ready to offer the economy additional stimulus after it announced interest rates would likely remain near zero until at least late 2014.

The Federal Reserve took the historic step on Wednesday of setting an inflation target, of 2 percent, a victory for Chairman Ben Bernanke that brings the Fed in line with many of the world's other major central banks.

iant PIMCO, told CNBC on Wednesday that the Federal Reserve will continue to keep its monetary policy accommodative for the next 2-5 years, calling it "QE 2.5."

Signed contracts for the sale of existing U.S. homes retreated from a 1-1/2-year high in December and demand for home loans fell last week, pointing to a moderation in home sales after recent hefty gains.

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