Once again this market shows how difficult it is for the bears to create downside momentum. The pessimists had some ammunition with a few poor earnings reports from Intel (INTC) , Exxon Mobil (XOM) and 3M (MMM) , but Facebook (FB) , Amazon (AMZN) and Microsoft (MSFT) put up very strong numbers.
Even with the good earnings there was potential for some 'sell the good news' action but the much better than expected GDP report took the wind out of the bear's sails. There were plenty of market players to point out the flaws in the GDP news but it helped to undermine the big bearish thesis recently that economic growth was falling fast
The macroeconomic bears may prove to be right in the longer term but this market isn't going to rush to embrace that view with a GDP print of 3.2% in front of its face. It just goes to show how dangerous it is to try to anticipate when big picture arguments are going to matter.
Yes, technical conditions are extended and the level of complacency is a concern but there continues to be strong underlying buying and breadth is much better today with about 4300 gainers to 2650 decliners. The indices are now trading at intraday highs and when that happens the bears cover shorts and underinvested bulls start looking for ways to put capital to work.
The gold stocks I mentioned yesterday, Agnico Eagle (AEM) and Kirkland Lake Gold (KL) are acting well. Also one of my favorite biotechnology names Axsome (AXSM) has good momentum. Qualcomm (QCOM) and Twitter (TWTR) are acting well after a rest and I'm looking for some new buys as well.
It is easy to argue that this market should be rolling over but it is not and that means we stick with what is working which are long plays. The bears day will come but its not today.