Market Outlook:
Yesterday's economic data may present a decent summary for the overall stock market environment. First, the GDP growth rate came in at +3.9%, which was well above expectations and the first look. However, the Consumer Confidence numbers continued to disappoint. So, while the backdrop for the overall market continues to be positive, there always seems to be something to fret about. This is starting to show up in our market models as well. For example, while the models remain positive on balance, the momentum components are basically limping along in neutral. Therefore, investors should continue to side with the bulls but remain flexible.

Looking at the Charts... To say the market is overbought and due for a pullback would definitely be an understatement. It has now been 28 days since the S&P 500 closed below its 5-day moving average. As such, traders are likely on high alert for any kind of negative inputs at this time. In other words, should something negative come out of the woodwork, it is likely that all of the millisecond trend following algos will start heading in the same direction. However, traders looking for a pullback to provide an entry point to the traditional year-end rally have been sorely disappointed of late. The bottom line is we would look for a test of the 2050 support level at a minimum at some point in the near term.

S&P 500 - Last 3 Months

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