Good news was good news Friday, a welcome change. Gross domestic product grew at an annual rate of 4.1 percent in the third quarter, the fastest pace in almost two years, and exceeding the 3.6 percent pace reported earlier this month. Business spending was also stronger than previously estimated. The S&P 500 gained 0.48% and the NASDAQ 1.15%. As we stated in yesterday's recap, the way the indexes held almost all of Wednesday's large gains was a positive sign for the bulls, and today we had a clear breakout in the major indexes.
With the indexes we have seen an interesting pattern recently - there have been two bearish engulfing days over the past 6 weeks (shaded in yellow in the S&P 500 chart); those are days where a higher high and a lower low than the previous day exist, with a close below the previous low. Those usually lead to intermediate term downturns. That didn't happen. Meanwhile, we had the opposite Wednesday with a bullish engulfing day. And of course there was follow through there. So it appears with QE markets we can respect the bullish signs and many of the negative ones are being engulfed (pardon the pun) by the flood of money created by the Fed each month.
We need to watch the NASDAQ next week as when it hits the top of its year long channel it has been a great sign of short term pullbacks. We still have a ways to go as it appears to be somewhere "off the chart" above 4150. Of course holiday weeks are usually quite positive, especially the days right around the holidays as volume dries up and "animal spirits" are joyous.
Blackberry (BBRY) was in the news today in a very volatile session after the company reported a steeper-than-expected $4.4 billion loss and a 56% drop in quarterly sales. However, the struggling smart phone maker also announced a five year strategic partnership with electronics contract manufacturer Foxconn, so maybe some were shocked another company actually thought Blackberry would survive another 5 years and/or Foxconn's experience working with Apple would somehow rub off.
Lots of stocks are looking very strong and similarly breaking to new highs - some samples below from different sectors: Google (GOOG), American Express (AXP), and Comcast (CMCSA).
Have a good weekend - especially if you are a last minute shopper - and we'll see you here next Monday for a holiday shortened week.