Stocks Rise as the GDP Estimate Plummets
The market closed down again, but the selling was less decisive. The indices had spurts of positive trading during the day as well. Energy stocks sold in late day trade as oil prices declined from highs near $104 to $96. Even our current oil play, REXX, declined towards the bell. But the market still has upside.
Although energy and financials weakened yesterday, the bulls poured back into technology. Additionally service and healthcare sector stocks caught bids yesterday.
Make no mistake, the selling has been strong this week. But, nothing happened. The bears accomplished nothing. No support zones were taken on any major U.S. index. The bears must take a support zone today. But the bears are running out of time.
In the Nasdaq the first area of support is 2700, and the target on a breakdown of that is 2590. A strong bear would take out 2700 this week. In the SPX, nearest support is 1301. For two straight sessions that support has held strong.
I think SPX will see a break down of 1301 and eventually target a stronger area of support near 1280. At this point, it looks like 1280 will hold up. Unlike most of the indices, SPX has successfully built numerous support levels on its climb higher from 1050. Sellers must test 1280 this week or we can expect a snap back rally to 1320.
Despite the defiance of the bulls this week, I am not excited about getting definitively long now. While the bulls have shown the ability to provide support once again to all the indices, the bears are stronger this time.
This confirms my belief earlier in the week when I mentioned the trend had changed. So, while buying pressure from the bulls may limit the downside of the decline; the renewed might of the bears will also limit the upside. And the result could be a series of sessions where the indices move back and forth without a discernible trajectory.
As if riots in the Middle East and surging oil prices weren't enough this week, today GDP came in at 2.8%, which is below estimates. Most analysts had expected 3.3% from GDP for the fourth quarter. And many street whispers were for a much higher number. The economic data disappointed, but will the market care.
There will be a webinar coming up next week that is free to all Market Forecast readers. While the topics will be diverse, I will discuss how the media effects stocks. If you would like to sign up for your free pass to the webinar CLICK.
Watch List
The TradeMaster Daily Stock Alerts watch list is bullish again - but onlyselectively. For a full list of our trades and video of our current stock watch list CLICK.
