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Index-Day-Trading™ is the first online service to deliver "Daily Market Outlook" with the future short-, mid- and long-term market trends based on volume technical analysis of major US indexes.

Market Stage
(3/16/2010)

From Monday's report: 'Even though advancing SBV oscillator readings are generally bullish, we do not consider the current circumstances to be a strongly bullish signal: SBV readings are close to the zero-line and there is a sizeable buildup of bullish volume. Overall, this chart setting suggests higher odds we could see more sideways trading action.' Today, we saw sideways trading action for most of the session. Following the Fed interest rate announcement, there was some volatility followed by a close in positive territory.

60-day charts with a 20-period SBV are presently showing a small decline in SBV oscillator readings. The following SBV values were found at session's end: Plus 24% on the Nasdaq 100; plus 27% on the S&P 500; plus 23% on the Dow. Declining SBV readings are bearish and would suggest the possibility of a downward move. We would however like to see a stronger decline in SBV oscillator values in order to confirm this signal.

1.5-year charts with a 10-period SBV are presently showing flat SBV oscillator readings. While the trend of the SBV oscillator remains positive on this chart setting, the accumulation of bullish volume is still growing and may push the indexes into an overbought condition.

Market Status
(3/16/2010)

Market Performance:
�

Last

Change

Volume

A/D Ratio

S&P 500

1,159.49

9.03 (0.78%)

3,724,117

4.59

NASDAQ 100

1,932.24

12.15 (0.63%)

732,336

3.26

DJI

10,686.29

44.37 (0.42%)

877,783

4.60

After flatlining for most of the session, bullishness resurfaced following the Fed interest rate announcement. After the usual post-Fed volatility, the major indexes drifted higher, closing at or near yearly highs. The Dow has now more or less reached its January 2010 highs as well; the Nasdaq 100 and the S&P 500 are both trading above their respective January highs.

NASDAQ 100 - 3/16/2010. 1-day Intraday, Modulated Volume.

Volume Analysis:
9:30 - 16:00: Today's one-day chart of the Nasdaq 100 provides an example how a large accumulation of bullish volume (which appears in green on the SBV oscillator pane) can ultimately stall or derail an ongoing uptrend. In yet another bullish session on the Nasdaq 100, an upside run was underway early on, but this rally quickly generated a solid output of bullish volume. Note the strong buildup of bullish volume between roughly 10:30 and 11:15, which generated two sizable bullish volume surges (peaking at 10:35 and 11:10). A strong buildup of bullish volume that takes place as the market pushes higher is often a sign that upside momentum can no longer be sustained. As you can see, the market started to weaken after the peaking of the second bullish volume spike. A shallow retracement was then seen that persisted until 14:15 (the time of the fed announcement). At this point, the news flow from the Fed perked up the bulls, who spiked the market higher. This sudden upswing led to the generation of the session's largest bullish volume spike (which peaked at 14:30). By 14:30, bullish momentum was clearly spent, and the index retraced sharply. A modest production of bearish volume (in red on the SBV oscillator pane) was however all it took to get the bulls going again, and they rallied the market anew. For the day as a whole, the index however output a large surplus of bullish volume in two large bullish volume spikes (view a 5-day chart).

Short Term (lasts a few hours to a few days): Late in the session, the market spiked higher in spite of our short-term assessment from yesterday's report that there was likely 'only limited (sustainable) upside potential coupled with a greater risk for a pullback'.

Most notable about today's (late-day) rise is the large output of bullish volume it produced on all major indexes (as discussed in the Volume Analysis section above). 5-day charts illustrate today's strong addition of bullish volume well; 30-day charts continue to show the large overhang of bullish volume amassed during this rally. We see this accumulation as a potential sign of distribution which should start to stall the major indexes at or near current levels. In spite of the overwhelming bullish mood, we think new long positions at this time have a poor reward-to-risk ratio. While slightly higher levels might still be achieved (but likely only an intraday basis), this is offset by a greater risk for a sudden pullback.

Analyst's Daily Tip:

Critical Volume
Critical volume represents the amount of volume that is required to cause the market to Reverse. Critical volume is generally equal to or greater than the volume surge that caused the trend prior to the Reversal.

Critical volume can manifest either as a large, sudden increase (surge) in the VMA or as VMA Surge (a combination of several concurrent volume surges).

Charts: Direct Zoom Function
With a single click, you can switch views on our volume charts. For instance, you can move directly from a one-year view to a one-day intraday view. If you press the F1 key before changing timeframes (even repeatedly), the cursor will remain fixed on a specific date. This feature is useful, for instance if you zoom directly from a five-year view to a one-day chart.

Financial Press Overview:
It was a Fed day that brought more reason to celebrate for the bulls, at least that is being suggested in the financial press. Notably blue chips and financials gained after the Fed's announcement that it would keep its benchmark interest rate at a record low level. In fact, the Fed went as far as to renew its pledge to keep things exactly the way they are for an 'extended period'.

The underlying fundamental reason for the Fed's decision to remain on hold was that the economic situation is still weak enough to warrant 'exceptionally low levels of the federal funds rate for an extended period.' Interestingly, one member of the Fed (Kansas City Fed president Hoenig) dissented from the otherwise unanimous Fed vote. According to the Fed statement, Hoenig 'believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.' A warning about providing too much easy money?

In economic news, the newest housing data came in weak with US housing starts in February off some 5.9% (housing starts now stand at a seasonally adjusted annual rate of 575,000). Partly to blame for the decline in the East and the South were several large snow storms. Housing starts were also off in the Northeast, but they were up in the Midwest and West. Building permits (which are much less affected by inclement weather) also lost ground, slipping 1.6% to 612,000 in February. Permits for single-family homes - considered a key indicator number - also declined, losing 0.2%.

In other news potentially supporting the US market, Greece was taken of the S&P credit watch. The US dollar weakened (and the euro and the British pound strengthened) after an announcement there now appears to be a consensus among European officials on how to proceed with financial aid to Greece, with bilateral loans playing a key role.

Key economic data for the week starting March 15, 2010. Numbers shown are consensus estimates (market anticipates this value) and prior value.

Wednesday:
	8:30 AM PPI M/M (Feb): -0.2% / 1.4% PPI M/M (core) (Feb): 0.1% / 0.3% PPI Y/Y (Feb) (H): 5.1% / 4.6% PPI Y/Y (core) (Feb): 1.0% / 1.0%

Thursday:
	8:30 AM CONTINUING CLAIMS Mar-06: n.a. / 4558K INITIAL CLAIMS Mar-13: 450K / 462K CPI M/M (Feb): 0.1% / 0.2% CPI M/M (core) (Feb): 0.1% / -0.1% CPI Y/Y (Feb): 2.3% / 2.6% CPI Y/Y (core) (Feb): 1.4% / 1.6% CURRENT ACCOUNT (Q4): -$119.8B / -$108.0B 10:00 AM PHILADELPHIA FED (Mar): 17.6 / 17.6 LEADING INDICATORS M/M (Feb): 0.1% / 0.3%

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