Friday, Jan 29, 2010
Better GDP Report Likely to Support Equity Rally
U.S. stock indices are likely to see fresh buying today since the GDP exceeded the consensus estimate of 4.5%. What this market needs right now is a shot of confidence, and news that
the economy is improving at a better rate than forecast could be exactly what investors have been waiting for. The problem is whether investors will be paying more attention to past data such as the
GDP or current reports regarding sovereign debt issues in Greece and Portugal.
If the situation in the Euro Zone continues to escalate and capture the bulk of the headlines, then look for investors to turn more risk averse. This would trigger a rally in the
Dollar and pressure stock indices and gold. Overnight, the March E-mini S&P 500 traded down to .618 support before mounting a short-covering rally. This level at 1069.50 is now being read as
major support. Regaining the 50% level at 1084.50 will be a sign of strength and could help form of a closing price reversal bottom.
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