The day started with much promise as the strong GDP numbers were released and confidence was better than expected. Shortly after topping around 10:00, we sold off, double bottomed at 1050 on the SPX and are now flirting with the 1054 area. A few days ago I brought up the prospect of how much "good news" is priced into the market. "Good news" to me is strong GDP numbers, positive semi news, or any other information that has been wildly available and known. Did we know that GPD was going to be strong? Of course we did! I said it this morning. If this is surprising to you I would love to know why.
In terms of money-flows, we see the OSX (Oil service index) is the top performer on the day. Perhaps the news that Senate has shelved the Energy Bill until the New Year has brought relief to this beaten down sector. Gold (XAU) is trying to break out above the 105 level. A break above this should push the index higher in the coming days. The news that the Medicare Bill was passed has Pharma under a bit of pressure. A bullish earnings report from John Deere (NYSE:DE) has some cyclicals humming, mainly Caterpillar (NYSE: CAT). Away from these select few things I really don't see much taking place in the market.
Overall this day feels very slow to me and it seems that most people want to steer clear of engaging in any big position trading ahead of the holiday. I was hoping for a bit more action and maybe we will get it later in the day. One thing I am paying attention to is how the VIX is acting. It is down 4.2% on the day and approaching the 16 level where it has held in three previous tests. Couple that with the fact that we are flirting with a break out in the broader indexes and it will certainly make for some interesting trading in the near-term.
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