Not a surprise to see first quarter GDP disappoint as stocks are unable to find their way higher. The Federal Reserve policy statement failed to spark enough buyers to push stocks back to positive territory. Another weak close for the entire market as we continue to see buyers flee the market at the end of the day. Volume was mixed, but up on the NYSE as the S&P 500 notched a day of distribution. Distribution count is quite high and within an area where a correction is quite possible. However, given the world is addicted to ZIRP and QE the high number of distribution days is less effective in foreshadowing a possible downturn. We continue to see lackluster action out of the market and despite being in an uptrend there are plenty of signs to be cautious here.
The number of distribution days for the S&P 500 is now at seven. Over on the NASDAQ the number has crept up to 6. Prior to ZIRP and QE this high number of distribution days would all but spell doom for the stock market. Doom as in a correction not so much an all-out economic collapse as we saw in 2008. This market could really go either way here as there is just enough positives to build upon. However, stocks like AAPL may weigh down the market’s ability to push higher. Time will tell, but with a high level of distribution days caution is warranted.
A positive for today’s session is certainly price action was contained within yesterday’s boundaries. An inside day typically is a positive for this market. Essentially the entire month of April has been contained within a tight range. Volatility has tightened up in a positive manner. It does not guarantee we push higher, but it is better than increasing volatility.
We cannot say GDP nor did the Federal Reserve policy statement surprised us today. A huge spike in inventory build helped save GDP from heading into negative territory. At least personal consumption ticked higher than expected, right? Do not fret over a weak first quarter GDP as the Federal Reserve believes the remainder of the year, like last year will improve. We cracked our crystal ball and are unable to forecast the future with any certainty like the Fed can. All we know is neither was able to spark buyers to push this market higher.
Continue to manage your risk via position sizing and exits. Cut your losses short! Aloha.
