Bad Economic Data But We Bounced Anyway – Bullish Engulfing Pattern Formed

Following up on yesterday’s technical analysis for the iShares Russell 2000 Index (IWM), we finally saw a strong bounce in the early part of the morning even though durable goods orders came in with an “atrocious” result, as was stated by some in the live-chat this morning. After the initial morning hours, the bulls were able to create a short-squeeze fueling a stronger move. Small-caps subsequently started to move up, but we still have significant upside resistance created due to the recent bleeding. As expected, I was a net seller. At the end of the day, we actually saw a Bullish Engulfing Pattern formed in the IWM. This typically indicates a reversal pattern after a downtrend, giving good odds that this bounce can turn into something more and that we reached the bottom. Look for confirmation tomorrow morning, but this pattern makes me feel far more comfortable.

With a good amount of economic data being presented Thursday morning, we must be prepared that bad data could trump any technicals. Here is a list of Thursdays data releases: (all times Eastern)

Thursday’s economic calendar:
8:30 GDP Q1
8:30 Initial Jobless Claims
8:30 Corporate Profits
10:30 EIA Natural Gas Inventory
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet