Fireworks on Wall Street, GDP Sparks Buying Across the Board

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Fireworks on Wall Street, GDP Sparks Buying Across the Board

Post  harpal1980 on Fri Oct 30, 2009 7:00 am

After a negative three days of trading, yesterday’s GDP result was welcomed by investors as the released figure beat analyst’s expectations. During pre-market U.S hours the GDP figure put to rest recent concerns, showing a 3.5% versus estimates of 3.2%. The good news showed that the U.S economy had experienced a better than expected third quarter and backed recent data showing signs of a recovery.

Even though there were mixed feelings among analysts regarding the figure, especially as some were claiming that the current figure is based on government’s efforts (subsidized growth), bulls took advantage of the situation and bought into the recent pull back. From a technical point of view, yesterday’s rally was broad based as fundamental traders were motivated by the good result, while technical traders took advantage of the 50 day moving average support to buy into the market.

Following yesterday’s report, which explained the importance of a higher low, one can see on the S&P500 daily chart that the broader market bounced off its moving average and has now started to form a higher low. Even though a follow through candle is required and resistance lies ahead, yesterday’s candle was quite bullish and showed the possibility of a continuation.

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