Clif Droke | Dec 11, 2012 01:04PM ET
Stocks remained buoyant this week as the market believes the Fed will remain accommodative in view of the latest drop in U.S. unemployment numbers. It’s widely expected the Federal Reserve will maintain its easy money policy when it meets on Wednesday.
Stabalized Conditions
The number of stocks making new 52-week lows has remained under 40 for the last two weeks and the major indices are all above their rising 15-day moving averages. That shows that the market has stabilized enough to allow rising short-term internal momentum to begin to have a lifting effect on the market.
Elsewhere it was announced that According to the Federal Reserve, consumer credit increased by $14.2 billion in October. This follows prior month's reading of a $11.4 billion increase, and is higher than the $9.9 billion that had been broadly expected among economists polled by Briefing.com. The increase in consumer credit underscores the continued positive readings in our New Economy Index (NEI), which indicates a positive overall holiday retail sales season for December.
Much of the impetus behind the NYSE market’s short-term strength is coming from the improvement in the short-term internal momentum. Specifically, the short-term directional indicator component of our internal momentum index (HILMO) is gradually turning up. This particular indicator measures the rate of change in the NYSE new 52-week highs and lows, which in turn reflects the incremental demand for stocks. When this particular indicator is rising after being in decline for several weeks, it implies the stock market’s short-term internal path of least resistance is turning up.
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