Dude, Where's My Pullback?

Color me surprised that the market didn't pull back on this morning's news. Q1 GDP came in well below expectations at -6.1% (vs. consensus of -4.7%), though still better than Q408's figure of -6.3%. I would have thought that this headline alone would have sparked some selling, but no dice. Did I mention it's hard to keep a good market down?

The highlight of the GDP report was personal consumption, which swung to a +2.2% increase from last quarters -4.3% plunge. This is one factor that investors viewed extremely positively, especially in light of the rising unemployment figures. Also, the inventory drawdown was a big drag on GDP, but if this activity is behind us it implies the restocking of inventories will add to GDP growth in the second half of the year.

The banks are the leading group this morning despite a Bloomberg.com story that preliminary results from the stress tests indicate 6 of the 19 largest US banks will require additional capital. But the gains so far today are pretty broad-based. Nice to see.

The FOMC also meets today, and are expected to leave rates unchanged at 0.25%, so the market's attention will once again turn to any comments that are made in the policy statement.

Asian markets were higher overnight, the dollar is lower today, while both oil and gold prices are higher; the 10-year yield is slightly lower, near 2.99%; and the VIX is plunging -5.8% to 35.74.

Trading comment: Yesterday I added a position in Visa (V) to our accounts, and I'm still looking to add FCX and RIMM somewhere in here. I am also looking at the insurance etf (KIE), which still appears to be trading at depressed levels.

That said, the market is up a lot this morning, and could selloff after the FOMC announcement. I will look to do some minor trimming/profit taking ahead of the event on some stocks that have nice gains, just to lock something in. This is not a major statement, just trading.

long V