Which Way Wednesday – Over the Top Ahead of GDP

4,575.

Do we deserve to be here?  Judging from earnings so far, I'd say no but the rally has kept going with a massive 275-point (5%) surge in the S&P 500 so far in October.  The real move we care about was the one from 4,390 to 4,550 – just 140-points but that causes us to expect a 28-point (weak) retrace to 4,522 or a 56-point (strong) retrace to 4,496 in the very near future – probably tomorrow.

Tomorrow is our first look at the Q3 GDP and expectations by Leading Economorons are still averaging 3.2%, which would be down 50% from Q2s GDP of 6.7% but the Atlanta Fed, based on silly things like Data – are telling us GDP is more likely to be 0.5% – that's quite the discrepency.   Will the market care either way?  A GDP Report so close to retraction could spur Congress to print more money and/or keep the Fed printing theirs with QE – both have been a big positive for the markets.

This morning we got the Durable Goods Report and the headline there is MINUS 0.4%, down from +1.3% in the August report – which wasn't very good anyway and was revised down from 1.8% originally reported.  July was also negative so we have net 0% for July, August and September and that keeps our poor Q3 GDP thesis intact, doesn't it?  

According to the WSJ:  "Money managers still have worries, ranging from the fate of President Biden’s infrastructure and social-spending plans to the potential unwind of Federal Reserve stimulus measures that have goosed markets since early 2020. For now, though, many investors say they are sticking with stocks in the expectation of modest if bumpy returns through the end of the year."

Our indexes are holding up well pre-market but BA was disappointing and will drag down the Dow and the S&P 500 and Asia closed down 1% and Europe is off about half a point so it's not very clear what US traders are so excited about.  MSFT, TWTR and MCD all had good earnings, however – so maybe they'll offset other weakness for the day.

Nothing really matters until tomorrow's GDP Report but…

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