While GDP in the second quarter was positive it missed estimates. Sellers took to the market in the first half hour of trading, but it would quickly be overrun by buyers. Led by the NASDAQ 100 stocks pushed to their highs by the close. Volume on the NASDAQ exchange rose and fell on the NYSE. However, FB was responsible for the rise in volume day-over-day. We are day 3 into this rally after last week’s big fall. It remains clear the NASDAQ is the place to be. The Dow and Russell 2000 continue to lag the larger market. We continue to work our signals and remain vigilant as this market still is not out of the woods yet.

Sentiment continues to be a mixed bag. AAII investors turned quite bearish as 40% of respondents were bearish on the market over the next 6 months. Just 21% were bullish over the next 6 months. II bears continue to be non-existent. NAAIM active managers continue to remain only 50% exposed to the long side of the market. AAII is more of a short-term indicator while the II survey is longer term indication. The most recent rally certainly comes after the market closed lower 5 straight days and it is not surprise AAII turned bearish. It will be interesting if we see all three sentiment indicators align.

August and September are historically weak periods for the S&P 500. Last year we saw the S&P 500 rally into mid-September until the Federal Reserve released its Fed statement. The S&P 500 nearly lost 10% before the 2014 October low was set in place. We can always find exceptions to the rule, but overall we do not expect the next few months to produce tremendous gains as odds are not in our favor. Perhaps we will get an outlier event. We just would not count on it.

Tomorrow’s volume will be elevated due to the end of the month. After closing with gains the last 3 days this market has an opportunity to push back into a confirmed rally. Stick with the process and execute flawlessly. Have a great weekend.