This morning the GDP revisions were better than expected as most economist expected the number to be revised to 1.4% the actual number that was reported was 1.6%. That slightly better than expected revision is really not a surprise to anyone and is still a poor number when you consider all the stimulus in this market. The major stock market indexes all caught a strong bid higher after the GDP revision number was announced.
Now everyone is waiting on the Ben Bernanke speech from Jackson Hole, Wyoming at 10:00 pm EST. The Federal Reserve Bank Chairman has recently stated that the economy has slowed down. We can only wonder what he can say today to lift the markets or even hold them steady.
Will his speech really matter in a week or two? Most of the time these events from a central bank only seem to cause a short term reaction whether it is positive or negative. The truth of the matter is the massive amount of debt that the United States is incurring is now a major problem. It appears the markets have traded lower because of government spending and weak jobs growth. The current housing crisis seems to be getting worse as prices still remain high, housing inventory continues to grow, and new foreclosures continue to hit the market at an alarming rate. Lately every economic number that has been released has been worse than expected.
As a trader we really look to trade the best chart setups and don’t really care if the market trades higher or lower. The key to the market over the past year has actually been the movement in the U.S. Dollar Index. When the U.S. Dollar Index declines the stock markets rally and inflate higher. When the U.S. Dollar Index rallies the markets decline or deflate. If you follow the dollar you will save a lot of time and energy when it comes to figuring this market out. As for the Bernanke comments today, they should have a short term effect if any effect at all.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
