Debt Debate Hides Atrocious GDP Results
| Recent Top 5 Positions | |||
| Ticker | Position | Sell Date | Return |
| ALJ | Long | 2/14 | +49.8% |
| ECTE | Long | 4/14 | +35.2% |
| JOEZ | Long | 4/11 | +42.2% |
| HILL | Long | 1/31 | +55.5% |
| AXK | Long | 5/31 | +30.2% |
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Volume tracked higher again as the indices jostled up and down all day. Large cap technology rebounded, as did big banks, but consumer services and energy experienced a weak day.
While I certainly did not like being stopped out of numerous positions this week, I am content heading into this big weekend in cash. I think many traders may have that attitude as well, which could make it difficult for the indices to gain any bullish traction until Monday.
The debt negotiations have gone nowhere. In fact, it looks like the politicians have moved backwards. I don't think the market would panic if the debt ceiling was not revised by Monday morning, but traders will not be willing to take that chance and they will sell positions today.
The pull back is likely a great time to add to your long holdings, but like most other traders, I am unwilling to take on much risk into the weekend without a deal in place. I tried to be bullish this week, and those trades didn't work; the market is too jittery now.
I did make one short (bearish) trade this week, which was a short of Ford. The TradeMaster portfolio went short Ford after earnings were released. I closed that position today near $12, which was our price target, for 8%.
One area of this crazy market that I am bullish on is China. Don't get me wrong, Chinese stocks are mired in a bearish trend, and financials for most of those stocks are suspect, but a near term bottom could be underway. And if we keep our stop losses nice and tight, we could see a quick 30% burst from a few Chinese names.
Yesterday I finished a special report that goes over 5 ways to trade China. The report was sent in an email and it can also be viewed on the TradeMaster website. It's important to maintain stop losses for those trades - you are fighting a powerful bear trend - but if timed right I think some of these stocks will rally higher over the next few weeks.
The indices overseas declined this morning following another stint of selling in the U.S. on Thursday. Economic data was good in Europe but concerns about the U.S. debt negotiations likely kept buyers from entering their market today. Retail sales in Germany surged 6.3% in June, much better than the 2.4% decline in May. Also, Eurozone inflation data showed a 2.5% increase, which is higher than the 2% target increase, but lower than the 2.7% climb from May.
Meanwhile there is nothing to cheer about in the U.S. this morning, other than maybe Quantitative Easing part 3. Second quarter GDP estimates were released in the U.S. today, and they disappointed. In the quarter GDP increased by 1.3%, way lower than the 1.7% expected. What's worse, first quarter GDP was revised to a 0.4% increase from 1.9%, which is appalling. I really don't understand how a paid group of economists can be wrong by such a wide margin all the time.
Earnings released over the past two weeks have been excellent while economic data has been generally soft across the board. I can't believe the idiots in Washington haven't made a deal, but it's Washington. Although we got another mild pull back this week, until 1301 breaks I will trade with a bull bias.
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