Futures received a jolt after third quarter GDP was revised higher to 5%. A slew of other economic data was released in front of tomorrow’s holiday shortened session. Durable goods and new home sales disappointed as the University of Michigan sentiment index finished just above expectations. On the session the Dow Jones Industrial Average led all markets with a gain of .36% with the Russell 2000 and S&P 500 tied for second with small gains. The NASDAQ did not share in gains with the index failing to close with gains. Volume was light on the session and we will continue to see light volume for the remainder of the week. Aside from the NASDAQ we will not argue with gains we are seeing from this market.
The most talked about story was certainly the huge revision for the third quarter. On the surface it looked like a great number, but as Zerohedge pointed out the boost came from Healthcare spending. Mind you this was spending done in the first quarter, but who is counting. It is interesting to see the stock market at all-time highs, 5% GDP, and yet we have a Zero Interest Rate Policy (ZIRP) in place. We are not policy makers, nor do we claim to have the expertise to do so. However, does it not seem like something is not adding up? You can decide.
Knowing GDP growth really is not going to help your trading at all. Focusing in on price action and volume for confirmation is a formula for success. This five day rally in the Dow and S&P 500 is quite unprecedented and does appear like it may have some legs. Of course a little consolidation period would do this market some good. As long as you keep your losses contained and position sizes proper you should have no problem extracting gains from this market.
Speaking of losses GILD caused us a bit of pain, but not as bad as it could have. We highlighted the fall in Biotech stocks yesterday and today it got worse. IBB was down less than 3% yesterday, but today was down almost 5% at the close. CELG was down 6.5% and BIIB was down 4.7% on the day. Not the type of action you want to see out of your stocks. As long as you are able to cut bait quickly losses cannot pile up destroying your trading capital.
Tomorrow trading will end at 1pm EST. We will be back with a short commentary, but we do not expect anything earth shattering to occur.
