In just 5 days the market has been able to regain almost all of the prior week’s loss as volume jumps on the day. Jobless claims were better than expected helping boost futures. The only other economic release was the Kansas City Fed Manufacturing Index and it disappointed. Economic news continues to tip the scales towards disappointment possibly setting up a disappointing GDP report. Towards the end of the trading session sellers took hold the market knocking it off its highs. While it was quickly kicked saved by a few buyers you have to wonder if the GDP report was leaked. Conspiracy theories aside the market was able to withstand sellers. We still remain in neutral mode even with the market recovering gains and we’ll stick with our process.
Investor sentiment is now being dominated by neutral respondents. AAII sentiment survey shows bears still in the majority although down 9 points from last week. Neutral respondents jumped 8 points while Bulls jumped 1 point. AAII Bulls remain under 30% despite this move off the lows. II survey saw bulls drop below 45% and bears drop below 20%. NAAIM survey is a bit more believable as it is a survey of actual positions investment managers are taking. Survey respondents were net long 69.9% slightly higher last week. Although not ultra-long the survey does favor the long side. The recent move in markets has certainly impacted sentiment.
The focus all day tomorrow will be the initial look at the first quarter GDP. Estimates for the first quarter GDP are in at 3%. It really is anyone’s guess what the number will be and even the expert “economists” are simply guessing. How the market reacts is the most important piece to this puzzle. Just do not fight this market and make sure you cut your losses.
Stay disciplined and stick with the process. Cut your losses and ride your winners.