On Monday August 29, much of the Big Apple (i.e., New York City) breathed a huge sigh of relief. And not just because flood-bringing tropical storm Irene failed to deliver the "nightmare hurricane" scenario feared by the entire eastern seaboard.
The opening to a brand new week also saw the violent stock market storm that has blown through Wall Street since early July taper off into clear skies. Since August 26, the Dow Jones Industrial Average has enjoyed a two-session, 600-point rally.
According to several news sources, one main factor is behind the market's rebound: "Bullish" comments from Federal Reserve chairman Ben Bernanke springing from his August 26 FOMC speech at Jackson Hole, Wyoming. On this, the following Associated Press headline captures the scene:
"Stocks climb after Federal Reserve Chairman Ben Bernanke said the US is on track for long-term economic growth. It feels like we're reaching for a bottom."
That's ONE interpretation. What Bernanke actually said was this (emphasis added):
"I do not expect the long run growth potential of the US economy to be materially affected by the... recession if -- and I stress if - our country takes the necessary steps to secure that outcome."
Interpret that as you wish.
As for a future scenario of the US stock market that does NOT include extenuating circumstances -- EWI's Stocks Specialty Service steps in and gives you objective analysis of the Elliott wave pattern underway in the S&P, DJIA and NASDAQ.
One of the latest Stock Specialty Service intraday updates present a compelling price chart of the DJIA since its early July reversal. For Elliotticians, this chart epitomizes a market nearing a critical juncture, as prices and the Relative Strength Index are hugging a significant trendline.