Today's Economic Data Should Boost GDP

The market is slightly lower in early trading, but some profit taking should not be surprising in light of the current overbought condition in the market and the fact that we have been up in 8 of the last 9 sessions.

In economic news, inventories rose in July +1.0% (vs. +0.7% consensus), which will provide a boost to Q3 GDP figures. Also, advance retail sales grew more than expected (+0.4%, +0.6% ex-autos), which also should add to GDP calculations. For those who have predicted a negative GDP number for Q3, I think today's data could have them rethinking that position.

Also, the IBD/TIPP Economic Optimism survey rose to 45.3 in September from 43.6 last month.

The dollar is lower again today, and that is helping gold break out to new highs. The yellow metal has broken above the $1260 level, reaching $1267 in early trading. Oil is flat near $77.

Most of the sector ETFs are lower in early trading, except for tech (+0.37%) which is bucking the downtrend. Financials (-0.94%) are down the most, followed by utilities (-0.41%).

Asian markets were lower overnight, as Japan still struggles with the yen at 15-year highs. The 10-year yield is lower to 2.68%, and the VIX is up 1% to 21.42.

Trading comment: The S&P 500 was able to close nicely above its 200-day at 1115, and is now back into positive territory for the year. This morning, the early selling brought the SPX back down to test that 1115 level, but so far that retest looks successful as the index has bounced off of that support and is back near 1120 (I know, it's still early).

The market is still overbought, and needs some consolidation. Also, this week is options expiration week, so there is always the possibility of a big down day. But it feels like each time the bears try to knock the market lower, if they can't get it down below near-term support levels, we could see more short-covering. I don't want to chase a market that has been up 8 of 9 days, but I do want to be a buyer on dips.

long VXX