In the week ahead, we should see somewhat of a range bound market. While a stochastic oscillator reads oversold, the moving averages will act as resistance if there is an attempt to move higher. We are entering a 5 week option expiry cycle kicked off with president elect Obama’s inauguration on Tuesday. This should produce a light trading day, however earnings season is heating up and big names like Johnson and Johnson, TD Ameritrade, CSX and IBM all report on Tuesday. Housing Starts are released Thursday at 8:30ET and should act as a market mover as well.

On a longer term outlook, the markets will be paying close attention to the actions president Obama and his new administration take to restore confidence in the economy and US financial system. It is important to keep in mind that the markets will react based on the emotions of greed and fear by the consumer. We will wait for a break of the S/P 880 level before we take on a cautiously bullish stance and a breakdown of the 817 area to become increasingly bearish.