• 548 days Will The ECB Continue To Hike Rates?
  • 548 days Forbes: Aramco Remains Largest Company In The Middle East
  • 550 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 949 days Could Crypto Overtake Traditional Investment?
  • 954 days Americans Still Quitting Jobs At Record Pace
  • 956 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 959 days Is The Dollar Too Strong?
  • 960 days Big Tech Disappoints Investors on Earnings Calls
  • 960 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 962 days China Is Quietly Trying To Distance Itself From Russia
  • 962 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 966 days Crypto Investors Won Big In 2021
  • 967 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 967 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 970 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 970 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 973 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 974 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 974 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 976 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

GDP Beats Guesses but Still Declines

The U.S. Second Quarter GDP estimate came out at 1.6%. This was lower than the previous guess of 2.4% but better than the estimate at 1.3%.

Stocks rallied on the news and Treasurys broke. The Dollar index also rallied sharply higher. Remember, though, that these moves are just knee-jerk reactions to the report. In reality the GDP fell which isn't good. This may mean all of these markets have the potential to reverse their initial moves.

The Dollar will be especially sensitive to this data. The Euro may rally because the Euro Zone economy may be stronger than the U.S. economy at this time. The higher-risk currencies will benefit if the stock market rallies, but could fall if equity traders cannot sustain the rally.

It is amazing that the markets are reacting as if it is good that the economy weakened. This shows how starved these markets are for positive economic news.

After a few minutes traders will put the GDP report behind them then turn their focus to Federal Reserve Chairman Bernanke's speech later this morning. Traders want to hear Bernanke give some guidance but he's not likely to say anything to erase the fact that the GDP is weakening and the threat of a double-dip recession remains real.

Some traders are beginning to think that the Fed does not have much left in their arsenal to stimulate the economy. This may mean that Bernanke may call out the current administration for its lack of fiscal responsibility.

Let's hope that Bernanke speaks with clarity and conviction. The market wants answers now to help alleviate the current "crisis in confidence".

The September E-mini S&P 500 is trying to build a support base slightly above the week's low at 1037.00. Uptrending Gann angle support is at 1040.75 today.

On the upside, this market once again fell below a key .618 level at 1050.50. Regaining this level will be a sign that the market is absorbing the selling pressure. Downtrending Gann angle resistance is at 1063.75. Additional resistance is at a 50% level at 1065.25.

September Treasury Bonds are still trading inside of Wednesday's wide range of 136'31 to 134'31, but above yesterday's inside range. Also Wednesday's closing price reversal top pattern has yet to be confirmed. The current chart pattern suggests this market could get explosive above 136'31 and extremely weak under 134'31.

Although the reversal pattern has frozen the market at this time, there is no "real" resistance. However on the downside, if the reversal top is confirmed by a break through 134'31, then look for a possible acceleration over the near-term to perhaps 131'16.

December Gold made a closing price reversal top on Thursday, but this move hasn't been confirmed yet. A trade through $1235.10 will confirm the pattern and set up a possible break to at least $1228.90. A break under this level will be a sign that the selling is serious.

Gold has been sensitive to stock market movement lately. A sharp break in the equity markets could drive gold sharply higher. A stronger stock market could break gold.

 

Back to homepage

Leave a comment

Leave a comment