SHORT TERM: market rallies after yesterdays debacle.
Stocks opened higher this morning, turned mixed, and then moved higher again. However, the trading range of the entire day occurred within the first hour or so. The NDX/NAZ made a new low for the move early, and then moved higher with the rest of the market. Today looked like a typical reflex reaction to a sharp selloff. Now that we have day one behind us, the next few days should give us a hint at what to expect in the coming weeks. The short term EW pivots mentioned this morning contained most of the entire days activity: SPX 1404 and 1417. Bonds closed about 1/2 point lower, Crude was again higher +30 cents, Gold was $14.00 lower but GLD recovered, and the Euro was down slightly. At 10:00 it was reported that the Chicago PMI declined to 47.9% indicating a continued contraction in manufacturing in that region. New Homes sales dropped 16.6% in Jan, quite a difference from the 3% rise in existing home sales reported yesterday. Home builders are working off inventory, and it would appear the prices are still too high for consumers. Tomorrow two important economic indicators: Jan Core PCE, and Feb ISM. If the economy continues to weaken as expected, we may get that rate decrease in March afterall. Today Bernanke and Kohl continued their verbal assault of the fiscal irresponsibilty of the current administration, and the continued failure of past administrations, to deal with the future. At the close: SPX/DOW were 0.50% higher, and the NDX/NAZ rose 0.30%. The market recovered a little of yesterday’s decline, but it wasn’t much.
MEDIUM TERM: neutral
LONG TERM: bullish.