SHORT TERM: market stages a very nice rebound after mondays selloff.
At 8:30 this morning, the government released the GDP revisions for Q2 and Q3. The news was much better than even the FED expected. Q2 was revised upward, as was Q3, and the GDP growth for the past 12 months is at 3%. Of course, there will be revisions to the revision, but for now the economy looks stronger than it appeared. Stocks opened strongly rallying until 11:00, when the Tech sector started to pullback. The pullback in techs continued until 1:30, when the NDX actually went negative for the day. But the Cyclicals continued to maintain their opening strength, and the entire market rallied into the close. In the end, a strong day, as the major indices gained between 0.70% and 0.90%.
Bonds, strangely enough, rallied on the GDP news. Bonds have been rallying for the past few months, in anticipation of a lowering of short term rates, by the FED, early next year. That seems even more unlikely at this point in time. Near the end of the day Bonds did close slightly lower. Another market, that is definitely effected by the news, is the Crude market. A stronger economy means a potential return to strong demand for energy: Crude rallied nearly $1.50 on the GDP data, and a decrease in inventories. Gold had a quiet day, trading within a narrow $3 range. Technically, with todays rally, the SPX has retraced most of its recent 30 point decline, (21 points). Yet Technical indices, the NDX/NAZ, which have been leading the market for the past month, have only retraced a 50% of the recent decline. Obviously, this is creating mixed signals as to the worthiness of this rally. For now, I will maintain that this is a "b" wave rally within the context of an overall correction. The SPX/DOW are displaying negative RSI divergences at the late afternoons highs, in the 15min/60min charts. The NDX/NAZ both failed to make a new intraday high in the afternoon. Tough market, be careful!
MEDIUM TERM: neutral … major indices appear to have completed their uptrends
LONG TERM: bullish.