SHORT TERM: stocks hold short term support early and rally into the close.
Stocks gapped down slightly at the open on a much weaker than expected Durable goods order report. Within the first 15 minutes the stock indices found support, the previous 2nd wave in the SPX/DOW, and rallied for a half hour. After some consolidation until about 2:00, they turned higher again into the close. It was a fair recovery considering yesterdays selloff. At the close the SPX/NDX/NAZ were up about 0.30%, and the DOW was 0.10% higher. When one reviews the DOW 60min chart, it becomes obvious why the market held in the early minutes this morning, see below. Thus far, I am labeling this decline as wave ‘a’, as it does not appear impulsive enough to label it a 1. Therefore, this rally, should it hold into tomorrow, will be labeled a ‘b’ wave. After spending the past four months anticipating waves unfolding to the upside, now it’s time to reverse gears, and starting looking lower. On the economic front, the revised Q2 and Q3 GDP’s will be announced at 8:30 tomorrow, then at 10:00 OCT New homes sales. Bonds added slightly to their 1/4 point gain this morning, Crude was up about 50 cents, and Gold completed a small wave ii which should lead to another rally shortly. Best to your trading!
MEDIUM TERM: neutral … major indices should have completed their uptrends
LONG TERM: bullish.