SHORT TERM: stocks gap down on a weak durable goods report
Overnight the Asian markets were mostly lower, and China’s SSEC posted another all time high. Europe came in 0.35% lower, and our stock index futures traded mostly lower overnight. At 8:30 durable goods orders were reported weaker than expected, and as a result, stocks gapped down at the open. After making an initial low in the first few minutes, the market waited until Bernanke’s speech was released at 10:30. FED chair Bernanke reported to congress: the FED was expecting slow growth, with moderating inflation, and the subprime mortgage problem has not overflowed into other areas of the economy. However, the main concern remains inflation! The market took that last comment as a sign of a potentially less accomodating FED, in regard to rates, and resumed selling off. At about 10:45 the market made a short term low as the SPX hit 1414, just a few point below the 1417 short term pivot point. Bonds rallied on the news now up over 1/4 point, Crude now testing resistance up $1.40, Gold is up $4.00, and the Euro is higher. Stocks are now sufficiently oversold short term, and on the daily charts, to confirm the end of Minor waves one and two. The short term EW pivot point at 1417 has held, thus far, and the market should now start some sort of rally. All three days this week have started with the market heading lower, as it pullbacks after the first impulse wave of this potentially new uptrend. A new uptrend has yet to be confirmed, but the technicals continue to look bullish. Best to your trading!
MEDIUM TERM: bullish
LONG TERM: bullish.