A slightly more serious look..

  1. First, a fundamental take. GDP numbers were below consensus despite the humongous stimulus packages passed. While anecdotal evidence regarding employment may be bleak and stay that way,  12% unemployment means 88% working (and spending apparently).
  2. From Moody’s, the following take on the just released GDP numbers. “Real GDP grew 3.2% at an annualized pace in the fourth quarter of 2010. This was below the consensus estimate for 3.6% growth and was an improvement from the 2.6% pace in the third quarter. Private inventories were an enormous drag on growth, subtracting 3.7 percentage points; this bodes very well for the near-term outlook and means that current demand is very strong. Consumer spending, investment and trade were all positives for growth in the fourth quarter; government was a slight negative. The economy will see very strong growth in 2011 as the tax and spending deal passed in December stimulates demand and the labor market picks up, creating a self-sustaining expansion.” “This 3.2% for Q4-2010 followed a 1.7% in the second quarter and a 2.6% in the third quarter. The trend is your friend.”
  3. Then,  a technical take. Markets generally do not go down in a straight line. Of course with POMO they did go up in a straight line for 5 months! Still, all the talk of the economy improving (it is), implies that some of those people who missed the boat (or were underinvested) will see some buying opportunities.
  4. Momentum stocks were getting pummeled for days before Friday anyway. Except for the Dow and the S&P, small caps and transports have not looked that healthy. 
  5. Gold went up Friday almost as much as it dropped Thursday. Rumors that some big seller is done selling.  There was a WSJ story about John Paulson making $5 billion from Gold. That was 2010 though. Are wondering if the SPY goes up Monday and by how much?
  6. On the SPY 124-125 is the 50-day, somewhere that people will make a stand.  Even if this brings about a shift in trend expect yo-yos.
  7. NFLX up so much has to be a short squeeze doesn’t it? Ask me what that means in a week or so, when we talk short-selling.