Just when I thought everyone was waiting for GDP this morning we ripped down yesterday to a big degree. I don’t care what anyone says, there was front running in there. Institutional relative volume was off the charts yesterday and the led the selling overnight ahead of the number as well. Why not take profits earlier in the week closer to the highs? IMO it is the revision and that will be what leads the action. GDP hit expectation but Q1 was revised a FULL POINT higher which now means the 2.4 number missed by a mile in terms of relativity to Q1 and the actual anti-progress or whatever you want to call it. This will likely counteract earnings to some degree if not dominate it. I have been saying we are overdue for a correction and I think that still stands. Merck made a good showing which gave a boost to early trading and the correlated markets have been lending a hand to the previously favored long side. The EUR rolled over long, the Yen strength subsided giving a boost to the carry trade. Gold up and crude flat rounded out the lack of pressure segment. But treasuries and corporate bonds are in the midst of a rally from the cheap debt and that is of course counteracting some of the positive sentiment in equities as well. I wouldn’t be too quick to bet the short side though and I do think we can see some more nice rotational activity today. The problem this morning will be the other pending news potentially messing with the timing and/or killing virgin levels around news time. I doubt Chi-town PMI and Consumer Sentiment will weigh too much on us, unless the sentiment number is really bad though. We will keep an eye on treasuries this morning to spot potential hard trending conditions spurred from fixed income. The better trend opportunities may be there today which may divert some institutional volume from equities. The key supports and resistance spots are well defined and there are some great levels today. We just have to see how the timing lays out…
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