UPDATE: 11:15 AM
The market is shrugging off the horrible economic news, meaning it likely has more upside in store. Remember, we have several targets we've been discussing for the past few weeks.
The big Gartley that started in October 2007 at 1576.09 never quite reached its .786 Fib level in May, coming up 11 points shy of the 1381.50 target. With yesterday's new intra-day high, I'd say it's definitely back in focus.
Likewise, watch the Butterfly pattern that started on 10/27/11 at 1292.66. Its 1.618 is immediately ahead at 1375.47. We reached the inverse H&S targets (1272) we discussed on Feb 23. The larger of the two was triggered was back on Dec 27. And, because yesterday's intra-day dip broadened the rising wedge, the apex has risen to about 1396.50.
After yesterday's rally, our model portfolio is 100% in cash. We booked a quick 1% gain on the opening plunge, then closed almost all our shorts/puts. The AAPL position I tried at the double top was quickly stopped out.
I will look to initiate more shorts around 1375 and 1380, but will place fairly tight stops. I might try a little put position on AAPL when it hits its 2.618 at 529.25. More on specific trades later.
Lots of big economic news out today... starting with the durable goods orders decline of 4% month-over-month. Ignoring the seasonal adjustment, which I hope I don't need to mention by now, the actual drop was a whopping -15.3%. While still 8.8% better than 2011's January figures, both the 4% and the 15.3% data suggest all is not well in recovery land. BTW, inventories were up 3.1%, a figure that will weigh heavily on tomorrow's GDP report.
Next up, the Case-Shiller housing data at 9:00 and Consumer Confidence at 10:00 AM EST.
Case-Shiller home price indices just out, and they're not pretty. The national composite was off 3.8% in 4Q2011, and down 4% versus 4Q2010. The 10 and 20-city composites were both down 1.1% in December over November, and fell 3.9% and 4.0% respectively versus December 2010. All three composites are at their lowest levels since the housing crisis began in mid-2006.
Nationally, home prices are back to their late 2002 levels.
Consumer Confidence from the Conference Board just out -- up to 70.8 from 61.5 with the bulk of the increase coming from "expectations" as opposed to "present situation". The expectations index increased from 76.7 to 88.0, while the present situation index increased from 38.8 to a still dismal 45. From briefing.com, a graph showing how far we've fallen, and how long the road back.
Remember, there's a lag with survey reports like this -- which means that the recent run-up in gas prices hadn't yet been felt when these results were tabulated. Look for the cheerleading-amped numbers to ease once consumers experience a few weeks of $80 fill-ups for the Sienna.