It has been a long and hard week for stock market optimists.  Bad news after bad news has put unrelenting pressure on equities but today's trade might offer enough momentum to fend off a slide in the S&P to the 1,000 area. 

Second quarter GDP was revised lower as expected, but the news wasn't as bad as most had anticipated and more importantly what the markets had priced in.  As of now, it is believed that the U.S. economy grew at a rate of 1.4% last quarter as opposed to what many believed would be much worse.  Also helping the bulls were comments by the Fed chair ensuring that the Fed would be ready to step in and defend against a weaker economy if necessary. 

As we have been noting in this newsletter, the market feels too bearish.  Retail investors have pulled their money out of stock funds in droves and there seems to be very little interest in putting it back to work anytime soon.  In fact, according to the American Association of Individual Investors, the number if individual investors that have a bullish outlook on the stock market in the next six months has plunged to 21%.  This is the lowest reading since March of 2009 and we all know what happened then.   I hate to say it, but once all of the weak hands are out, it is often the time to begin looking for a rally. 

In yesterday's newsletter, we were calling for a bounce to the 1065 area, and today we got what we were looking for but it will take some follow through buying early next week to confirm a near-term bottom.  I hope some of you were able to capitalize on our advice of trying to get long the S&P on a dip to the mid-to-low 1030's; the low prints weren't see and the 1037 print was quick...

Going into Monday, it seems as though we could get a bit of digestion from the rally.  Aside from seeing a 25 plus point run in the S&P from Friday's low, historical statistics suggest that the next to last trading day of August tends to see a struggling market.  According to the Stock Trader's Almanac the S&P has closed positive only twice in the last 13 years. 

We see resistance in the September S&P futures near 1065 and then again just under 1070.  In the meantime, support lies at 1050 and 1034. 

If you are trading the NASDAQ or the Russell, we have revised our upside targets to 1835 and 624.  If the markets take another big dip down, look for support near 1756 and 596.  We still lean toward buying weakness.