Durable Goods Orders Disappoints

The Dow closed down marginally by 26 points today as Durable Goods Orders disappoint.

Indeed, investors were looking forward to a surprise in a vain hope of extending the already overextended short term rally. They didn't get it. So why didn't the Dow just make a significant down day instead? Thats probably because of 2 reasons. 1, Durable Goods Order is a volatile number. Sudden disappointments like this doesn't surprise many investors let alone the fact that the decline was due mainly to decline in civilian aircraft orders. The airline industry is still very much underwater as we all know and a drop in sales hardly surprise anyone. 2, investors are looking for to a more important Q2 GDP this Friday (see stock market calendar). This number could mean a lot of things if it surprises to upside. However, I do suspect that much of the surprise as already been priced into this short term rally which happened without an extremely strong driver behind it. This means that the short term technical pull back and testing of the 30 days moving average for the Dow might just happen whether or not the GDP numbers are good. One good sign on the technical front is the levelling out of the 200 days moving average which confirms a change in the long term trend. In fact, the short and long term moving averages are now beginning to fall into bullish alignment as well. In a bull market, the short term moving averages should be stacked above the long term averages and vice versa in a bear market. The 20/30/50/200 days moving average are now almost stacked up correctly for the Dow and that confirms the bottoming and a change of mid to long term trend. For now, the Dow remains in all out bull trend.