GDPhursday – Fiscal Cliff Progress Good for 200 Points Ahead of GDP
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Wow, what a move!
The Dow opened yesterday and quickly dropped to 12,760 but we finished the day at 12,984 as both John Boehner and President Obama made nice noises about the ongoing Fiscal Cliff talks. Since then, we've had another 100 points of follow-through in the Futures and, as I commented in Member Chat yesterday, this is all very, very brave action ahead of the 8:30 GDP report, which is expected to show Q3 growth of 2.8% but, based on yesterday's Beige Book (see our commentary here) may come in closer to 2.4%.
If we can avoid or get past that disappointment, THEN we can put a rally together on happy talk out of Washington. Other happy talk comes from John Hilsenrath, who claims the Fed is nearing a decision at the upcoming meeting to create an additional bond-buying program to replace Operation Twist with something in the $500Bn range – and we know how the makets love rumors of More Free Money!
As you can see from Dave Fry's intra-day SPY chart, the bears were severely punished yesterday and this morning we move back within striking distance of closing out November back where we started – at S&P 1,420 – and we'd have to call a flat month a huge victory for the bulls at this point but still a long way to go before we work our way back to the October highs (1,470).