The big story to start the session was the big upward revision of the second quarter GDP.  Expectations were for the second quarter to have grown at 3.9% annualized rate, but revisions were well past that at 4.2%.  The revision was great news for the economy, right?  Futures did not react much and continued to indicate a lower open.  Volume on the session was lower across the board indicating sellers were not overzealous selling their holdings.  We are approaching the end of the month and with volume this low and lack of downward price pressure today was a nice consolidation day.  The trend continues to remain in place, but even with overbought conditions existing we have plenty of stocks setting up to run higher.

Conditions set by Central Banks are such we still have an upward bias.  The ECB ABS program is set to be run by Black Rock and begin sometime late this year.  Low rates will continue to be the stable of Central Bank policy.  Outside of a Black Swan Central Banks are going to try their hardest to keep the wealth effect afloat.  It would not be a surprise if we see the Federal Reserve Bank transfer payments to taxpayers as another “program.”  We do not have evidence the stimulus provided to the markets is going to dry up any time soon and this bodes well for stocks.

Investor sentiment has jumped quite a bit and it comes as no surprise given the new all-time highs set by the S&P 500.  AAII Bulls jumped above 50% ending the week at 52%.  Bears dropped below 20% to 19%.  Clearly the individual investor got a little giddy.  Active managers on the other hand bumped up their exposure, but not at extreme levels.  The NAAIM Exposure Index ended the week at 75% after spending some time at 50%.  We have seen this index above a 100 a few times, but not since 2013.  It is unlikely given the Federal Reserve’s stimulus these sentiment indicators are pointing to anything other than a short-term pullback.

We continue to look to feed our winners and shed our losers.  In a slow uptrend we have here it is paramount you rotate into your winners.  Enjoy the last weekend of the summer and we will see you back after a long holiday weekend.