Here's how Week 1 closed on January 27th for YM, ES, NQ & TF. This was the week of the FOMC announcement to keep interest rates low until the end of 2014. As I mentioned in my post of January 25th, these four e-min futures indices have been travelling upward in a channel from their 2011 lows.

The first Weekly chart below shows that YM took a slight loss from the prior week after attempting new highs, but closed just above a confluence of 3 trendlines (one from the highs of 2007), a 78.6% Fibonacci extension level, this month's Volume Profile POC (horizontal yellow line), and the lower one-quarter of the channel on higher volumes than the prior week. Current price sits well above its 50 sma (red). The weekly uptrend hasn't been broken yet for YM.

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GDP report came weaker than expected. Fitch downgrades five European countries. And SPX barely moved! You still think news drives the market and there is no market manipulation! Which rational investor will buy equities when countries are downgraded? All the power to the believers.

Today was a kind of consolidation day where the purpose of the day was to kill the short and bring in the wavering bulls. The problem as I see it, the capitulation is not complete yet. The SSI (Speculative Sentiment Index) is still negative for the Euro and AUD.  The SSI has to turn positive before we can see any meaningful pull back.

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Have the markets started building 2012's chocolate cake for a bullish Christmas tea party? Let's see what foundations have been prepared for the first layer, so far, in January. The following charts and graphs will help me to illustrate this possible scenario.

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