1/29 Morningline

Pop the champagne cork! The recession is over!! Yay!!!

Two quarters of GDP growth!!!! The market must be taking off like a rocket!!!!!

Not.

By one rule of thumb, two consecutive quarters of declining Gross Domestic Product signal the beginning of a recession, so two quarters of gains must signal the end, right?

In truth, the GDP is the ultimate lagging indicator. It is released quarterly, revised extensively, and means very little to the price of stocks (or coffee, for that matter). So after a surprise 5.8 percent increase in the GDP, blue chip stocks (SPY) are hanging around the 50 percent Fibonacci retracement level, where they've been for the past week. In the United States, the National Bureau of Economic Research, a think-tank, proclaims when recessions start and when they are over, based in part on GDP but also on much more. It can take them more than a year to figure out that a recession as started or ended, so don't expect to pop the champagne cork until next winter -- maybe.

What did move was the value of the dollar against the Japanese yen (USD/JPY). It rose by 1 percent, beginning at 8:30 a.m. Eastern, the moment the new GDP numbers were released. It is showing a potential bull signal using Person's Proprietary Signal.

The fear index (VIX) moved down within yesterday's trading range and is showing a pps bear signal.

Otherwise, as the trading day begins, the nays have it. New signals outside of the dollar/yen and VIX? Nay! Big moves in the indicators? Nay! How about the euro? Nay! My holdings? Nay! Nay! A thousand times Nay!

Let's run the numbers:

Indicators, at about 10 a.m. Eastern:

• Blue chip stocks (SPY) is trading at $109.30, entered bear mode at close on Jan. 21 (at $111.70)
• Fear index or volatility (VIX) 22.85, bull (bearish for stocks), Jan.21 (22.27)
• Treasury long bonds (TLT) $91.44, bull, Jan. 12 ($90.32)
• Corporate junk bonds (JNK) $, bear, Jan. 13 ($39.85)
• Gold (GLD) $39.02, bear, Jan. 12 ($110.49)
• Oil (USO) $36.35, bear, Jan. 12, ($39.63)

Forex currency pairs:

• Dollars per euro (EUR/USD) $1.3911, bear, Jan. 15 ($1.4385)
• Yen per dollar (USD/JPY) ¥90.73, bear, Jan. 12 (90.97)

Stock/options holdings, February expiry:

• CVS, iron condor (p29/-p31/-c34/c36) $32.72, bear, Jan. 21 ($33.24)
• ERTS, iron condor (p15/-p16/-c18/c19) $16.73, bear, Jan. 22 ($16.27)
• MCO, covered call (-c30) $28.35, bull, Jan. 27 ($28.83
• PALM, covered call (s/-c13) $10.86, bear, Jan. 22 ($11.93)

New to Private Trader? Check out the Reader's Guide.

New to private trading? Here's a look at How to Become a Private Trader.
Topics:
S&P 500, SPDR, Spiders, Treasury bonds, high-yield corporate junk bonds, gold, precious metals, oil, petroleum, CVS, pharmacies, drugs, Electronic Arts games, Moodys bond rating, Palm smartphone Pixi Pri.