- 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).
- 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.”
- 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.
- 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.
- 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?
- 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.
- 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.