Slight Downward Revisions to Q3 GDP

I'm getting a bit of a late start today, which is often the case when my parents are in town visiting. My kids are so excited to have them there, its hard to keep them from running in and waking my folks at the crack of dawn.

The markets are higher this morning, which would make for three straight gains in the SPX if it holds. Those waiting for the Santa Claus rally to start next week might be a little late to the party.

Asian markets were mostly lower overnight, but Europe is higher today after the ECB released results from its latest liquidity program, the Long-Term Refinancing Operation (LTRO). There was strong bank participation, which hopefully will prove to be a good think like TARP was in the U.S. (even though it was unpopular).

In economic news, Q3 GDP was revised downward a bit to 1.8% from its last estimate of 2.0%. But early Q4 estimates are for growth above those levels. The December Univ. of Michigan consumer sentiment reading came in at 69.9 which is up nicely from last month's reading of 67.7. And this week's jobless claims were lower than expected. So net-net, I view today's economic data as a glass half-full.

The dollar is flattish and commodities are mixed. Gold prices are lower to $1607, while oil prices are higher back to $99.60. Copper prices are higher also.

The 10-year yield is down slightly to 1.95%; and the VIX is falling further down to the 21.0 level. I view this as bullish in the short-term, but would probably look to get long volatility and expect another pickup in Q1.

Trading comment: The SPX continues to act well since bottoming on Monday. It is outperforming the Nazz this week after reversing yesterday's lows and finishing in the green. The chart below shows that today is the third day (so far) above the 50-day average, and now the overhead 200-day is in sight. It currently sits near SPX 1259. I think if this rally continues and people look to put more money to work into year-end we could take out those levels, but I don't expect it to be a straight shot. I also think money will be put to work in the winners, not the laggards, as portfolio managers try to add to their winners and make it look like they had big positions in those stocks.