January 23, 2015 Market Maker – Steve Kalayjian The Dow Jones Industrial Average closed up 259 points, that is four days in a row the market has seen and upward trend. Last week there was a significant oversold market – the target that Steve was looking for was between $17,600 and $17,900. An area where if someone was a long term investor that would be the time to lighten up on some equities within that range. There is possible trouble at the end of the first quarter and the beginning of the second quarter. As mentioned last week, there is a gap at the bottom end of the market that will get filled sometime in 2015. What fueled the markets current rally is a report from the European Central Bank, the ECB, that they will provide a stimulus throughout Europe in the form of a bond purchase of $1.2 Trillion Dollars. That is $69 Billion Dollars a month in bonds. Steve is unclear how they think that this will fuel an economy. The United States attempted to do this domestically, and that left us with over $4 Trillion dollars assets on the Federal Reserve’s Balance Sheet. Steve is not sure if any of this is legal but he knows that it was done. There is no listing on the Federal Reserve’s mandate that allows them to hold assets of that magnitude, if any. They see there is weakness in Europe so they have to do something to encourage market growth. They want Europe to grow and they feel that by raising stock prices it will get into people’s psychology that have money in mutual funds or pension funds to go out and spend money in their economy. Steve does not buy this, and it is unclear how this process will wors. Stay tuned tomorrow for more updates on Market Maker.