GDP out and frankly in line with expectations at about 1%….so no cause for alarm, but reinforcing thoughts about a very stagnant to weak economy. Mr. Bernanke clearly had an early look at this number and would not have likely influenced him, or put increased pressure to introduce QE3 at his speech this morning.
S&P 500 futures down 80 bps, the DAX down 3% this morning, only about 2% off of the low made last week and down more than 20% in the month of August alone.
The SPX is in a fairly tight spot here…..after breaking below 1200 a couple weeks back we have been bangin around in between 1200 and 1100 and it really feels like we are going to break one way or the other.
I know it has become consensus, but I think no news (re stimulus) is very likely to disappoint investors, especially on a summer Friday where most on the East Coast are bracing for a hurricane and are already pissed that they are gonna spend the weekend inside with their whining kids (I love you Ellie and Alex, But I am just saying, much prefer to be at the beach than playing our 15th game of Monopoly).
Today I am still focused on the bank stocks, if BAC in particular can’t hold yesterday’s gains then watch out below…..Also AAPL put up a heroic fight yesterday, want to see it to continue to outperform. TIF is up this am on a beat and raise qtr. watch this one closely to see that it can hold its pre-market gains, I suspect it doesn’t.
Not to sound overly dramatic but this could be it today….we could either get the plug that many investors are looking for to start what would become a self full filling short squeeze or the sort of FU sell off signaling to the Fed that this thing is on life support as it is, and will not likely self sustain…..
Either way we are going to move, so my advice is don’t be stubborn because we could be on precipice of a big move and there are no points for nailing bottoms, especially relative to the potential risks of stepping in at precarious levels like now……..
Be careful pressing shorts here and as always wait for a bounce….if the market gaps lower when the text of the speech is delivered it is likely to pop back, and vice versa.
8 Month chart of SPX below shows 1121 as the next stop on the downside and then 1100, the intra-day low of this market cycle……