Yesterday I said I’m looking for a little more downside, and I’m sticking to my guns…despite the fact that the market is up right now. The closing price is the most important price of the day, and we aren’t there yet.

But what about the incredible surge in durable goods orders? They rose 0.8% in June, after all.

Great, but as I said (while standing on my proverbial soap box) on Tuesday, the economy isn’t the market. I’ll remind you the market was down more than 2% yesterday on a string of bad earnings announcements. Did those companies suddenly not have bad earnings because of today’s news?

I’m not saying today’s news isn’t good - I’m just saying the next batch of news could just as easily unwind these gains. In the short run, I’m far more interested in whether or not the market can string together two or more days of movement in one direction. The economic data is only long-term data for me…nothing I have to react to today.

So, here are the two scenarios I see, and how I’m going to handle them.

1) The market closes higher today. If we do close higher today, I’ll be on the lookout for another selloff for part of next week. Thursday wasn’t enough to burn off all the overbought pressure we had established - we’ll have to pay the piper sometime. Once again, as long as stocks don’t get totally crushed, I’m looking for more short-term gains after we bleed off some more of the euphoria.

2) The market closes lower today. This would actually be the desirable scenario for more bullishness next week. Let’s go ahead and take a dose of medicine now, cleanse the palate, and move on with a clean slate next week. If we see this happen and get off to a good start next week, I’m piling back in. The buy signals we got two weeks ago are good for more than just two weeks…..they’re more like two month signals.

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