From the Trading Desk

GDP Disappoints and the Fed keeps the Flood Gates open, but Stocks Fall

The market was dealt a blow with the fourth quarter GDP printed at -.01%. Expectations were for fourth quarter GDP to come in at 1.1%. Initially futures fell, but were able find their footing heading into the open. US Treasury 10 year yields jumped above 2% as sellers anticipated the Fed may be ending their latest round of asset purchases. All eyes were on the Federal Reserve and its policy statement at 2:15 pm EST. We did not get any changes from the Fed, but we did see the market sell off after the policy statement. Small cap stocks led the decline with the Russell 2000 fell more than one percent. Today was the first day we got a real day of distribution on the NASDAQ in quite some time. Volume on the NYSE fell on the day avoiding distribution. Today certainly doesn’t end our uptrend, but we do need to see this market avoid piling up distribution days.

The commentary regarding the GDP figure was quite funny. GDP counts government spending in its calculation and therefore if the government spends more or less it will impact GDP. In the fourth quarter GDP fell in part due to defense spending. However, all those saying GDP was good outside of the defense spending do not make the same argument for the third quarter. In the third quarter government spending was the only thing keeping GDP in positive territory. Yet, we didn’t hear how weak the GDP report was because it was boosted by government. In the end, GDP shrank and if revisions follow the historical trend this figure is likely to be revised lower. Does it matter? Well, the Fed has pumped trillions and we can’t even print a decent GDP figure is pathetic. In the market it doesn’t impact us as we focus on leaders and price action. Ignore the noise.

The Yen continues to fall with the Euro rallying. At some point we are going to see the Yen at its breaking point. Its oversold condition does not matter as the currency is in free fall. Keep an eye on how currencies react to this situation. The Japanese are hell bent on printing their way out of their economic troubles. It hasn’t worked so far and now they may be on a path of no return with its currency. Currency crisis happen when the market loses confidence in its viability. This should be an interesting next few weeks.

Short-term trends:

TICKER ST TREND TREND CHANGE DATE CLOSE %
SPY UPTREND NO CHANGE 1/30/2013 150.07 -0.39%
IWM UPTREND NO CHANGE 1/30/2013 88.97 -1.20%
QQQ UPTREND NO CHANGE 1/30/2013 67.02 -0.21%
USO UPTREND NO CHANGE 1/30/2013 35.49 0.57%
UNG UPTREND NO CHANGE 1/30/2013 18.77 2.23%
GLD UPTREND NO CHANGE 1/30/2013 162.19 0.75%
SLV UPTREND NO CHANGE 1/30/2013 30.92 1.98%
DBC UPTREND NO CHANGE 1/30/2013 28.48 1.14%
FXY DOWNTREND NO CHANGE 1/30/2013 107.6 -0.42%
FXE UPTREND NO CHANGE 1/30/2013 134.59 0.55%
TLT DOWNTREND CHANGE 1/30/2013 116.95 -0.17%

TLT flipped back to a downtrend today. No other changes.

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