2nd quarter GDP figures were released this morning and indicated the U.S. economy grew at 2.4% in the quarter. This came in line with expectations, which were downwardly revised over the last month as newer economic data has been released. This indicates a trend downward in the rate of growth for the economy, which will be a worrying sign to economists.

Stock index futures have reacted negatively to the news as Dow Futures are down over 90 points as I write this.

I wrote in another blog today about the worthlessness of economists. Wall Street firms and the government rely too heavily on these folks, who can no more forecast the economy six months down the road than a weather man can forecast the weather two weeks away. Check out this blog at I'm Just Wrong.

Scott Cole
www.kungfutrader.com

Stocks Up Strongly at Mid-Day

U.S. Stocks are up a solid 1.5% across the board at the mid point of trading on Tuesday. Stocks are up in spite of a downgrade for Portugal, which was shrugged off by European traders. Stocks are posting strong gains in spite of Apple shares getting pummelled today due to Consumer Reports indicating it could not recommend the new I Phone 4.

I mentioned last week that if we saw a follow through day in the market averages this week that it was likely a sign that an intermediate term rally is under way. If the market can close at its current levels of the session on volume above yesterday's volume, that would be a confirming signal. Big rallies do not start without such a signal from the market after a sizable up day such as we had last week. If a confirmation day comes within 4 to 7 trading days of the first big up day, then the green light is on.

Scott Cole

Stocks End Week with Solid Gains

U.S. Stocks gained for the 4th consecutive day, ending the trading week with solid gains across the board on Friday, continuing the rally that began on Tuesday. For now, the character of the market has clearly changed to bullish. We will now look for a big confirmation day where the averages are up at least 1.5% across the board. If that occurs next week, traders can feel at least some confidence that this move can last a while.

More to come over the weekend.

Scott Cole

Stocks Post Nice Gains Again

U.S. stocks closed with triple digit gains in the Dow Industrials again on Thursday as traders were impressed with some of the retail sales reports out today, as well as Treasury Secretary Geithner's comments that the capital gains tax rate will remain at 20%. This takes away some concerns of investors and private equity firms that their profits could be taxed as ordinary income at the top rate, which is scheduled to rise to over 39% next year when the Bush tax cuts expire.

More later.

Scott Cole
www.kungfutrader.com

Stocks Make Big Gains

U.S. Stocks posted very strong gains today, with no particular reason for the move. Volume was slightly ahead of yesterday, and therefore I give this move some credibility. Stocks rose about 3% across the board today in the major market averages.

Stock index futures were initially suggesting a lower open, but as the market progressed, leading up to the open, they picked up some steam, and the train seemed to gain significant momentum throughout the day. This is the kind of trading day that suggests the possibility of a change in character for the market.

A check of the leading industry groups today indicates that real estate was the big winner on the day. Five of the top twenty groups were real estate related. Other strong performers included banks, technology and casinos.

Going forward, the market still has a big hill to climb to negate the recent downside breakout completely. If the market can push to a close above 1131 on the S&P, then you have a head and shoulders continuation pattern, which is bullish. Ultimately though, I still see a trading range market, but the range just got a bit wider.

Retail sales will be reported tomorrow for June, and that could put a damper on the market. An upside surprise will add to today's momentum.

For daytraders, the pickins could not have been easier. Opening range breakout systems worked beautifully during this move to the upside, since there was not a major upside gap in the major averages. The single best stock from the standpoint of its move for the day, and its volume was Omnivision Technologies. It rose over 11% on the day, and is a nice liquid stock.

Scott Cole
www.kungfutrader.com

Stocks Poised for Strongly Positive Open

U.S. stocks are setting up for a strong upward open this morning, as analysts are raising profit expectations for U.S. corporations. A global rally is underway, which should help to erase at least a quarter of last week's losses.

At this writing, S&P 500 futures are up over 13 points and the Dow Industrial futures are up over 100 points. The Euro and Pound are also trading higher against the Dollar.

It is notable that the psychology of the market seemed to shift to a very bearish outlook in recent weeks as the market tumbled. This suggests a rally may be in order, as the market became oversold. Earnings will drive stock prices in coming weeks as corporations report 2nd quarter earnings.

Stocks end week lower on Jobs Report

The stock market ended lower Friday, but well off its lows ahead of the long 4th of July weekend. The news of the day was the June jobs report, which saw a net loss of 125,000 jobs for the month as part-time census workers were laid off. The unemployment rate actually dropped to 9.5%, but that is due to over 650,000 workers leaving the workforce, as they stopped looking for a job. The market sold off to as much as a 120 point drop in the Dow Industrials, but short sellers covered their positions ahead of the weekend. Volume was light.

Earnings season is now ahead and what should start to drive stocks a bit. Rather than focus on actual 2nd quarter earnings, traders will likely focus on company outlooks. The comparisons to last year will be very favorable, as the economy has improved somewhat since then. The fear now though is whether the economy is beginning to weaken again, as the more recent data suggest.

One interesting new trend that developed this week is that the U.S. Stock market has decoupled from the Euro. In recent weeks, due to the Greek debt crises, stocks have fallen in response to a weakening Euro. This week, however, the Euro has rallied sharply, and yet stocks continued to fall. Traders now have an eye toward the U.S. as a new debt problem. Currency traders are looking at Europe a little more favorably since Europe's attitude about debt has changed toward austerity. Here in the U.S., the Obama administration insists on more stimulus.

Keep an eye on the trends!

Scott Cole

June Jobs Report

Stock index futures are showing a modest bounce after the June jobs report indicated a loss of 125,000 jobs in the month. Most of the losses were in temporary government jobs, as the private sector apparently added 83,000 jobs in the month.

The unemployment rate actually dropped to 9.5%. Average hourly earnings were down 0.1%. As the market pays more attention to the data as I write this, the futures have turned negative. 650,000 people walked away from the job market. This accounts for the drop in the headline unemployment rate. Overall, the report is now being viewed as weaker than the headline numbers.

Traders will likely re-assess the numbers throughout the day.

On a technical side, if the S&P 500 falls below 1000 any time soon, look out below. That will have a psychologically devastating effect on investors.

Scott Cole