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Thursday, September 24, 2015

Daily update 9/24 Durable goods

Bounce setup.

We had another news induced big gap down.  In the 11:00 hour SPX hit the lower Keltner channel and selling pressure dried up.  The dip buyers eventually came to the rescue.  This is a good place to bounce from and we have had a sizable move straight down. 

The futures are showing a potential short term double bottom.  The price action looked good today for a bounce.  They just need overnight news to cooperate.  Yellen speaks tonight.  Maybe she will say something the market likes.  The futures are up a bit from the 4 PM close.  So far so good. 

This last swing down seems to have convinced most people we are headed to retest the low.  However, there are some things about this move that just don't quite look like we are headed straight there.  Now that so many are convinced it would be just like the market to bounce.  That would likely squeeze many shorts.  It also could convince some bulls that the retest is over and suck in new longs.  Then the next mostly likely thing to happen would be for the market to roll over and test the low for real.  Thereby pissing off just about everybody.  This market has been very good at filling downside gaps in fairly short order.  It is certainly within reason the market goes on a gap fill mission over the next few days.  A close above today's high could set that in motion.

The durable goods orders came in showing continuing weakness.

This is now seven months in a row the core durable goods YOY change has been negative.  While we had a similar streak in 2012 we avoided a recession.  Many believe it was QE.  I believe it was hurricane Sandy destroying 250k cars and plenty of buildings.  We might not avoid it this time.  No sign the economy is picking up yet.  No wonder Yellen did not want to raise rates.


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