Gross domestic product grew at a 2.7% annual rate, up from a 2% prior estimate, revised figures from the Commerce Department showed today, and U.S. equity markets are trading up on the day thus far. E-mini S&P 500 futures are up almost 8 points, or around .55%. The E-mini Nasdaq is leading the way in U.S. equity indexes, trading up 23.5 points, or .88%. Traders seem to be reacting bullishly to not only recently released GDP data, but also to positive expectations regarding the fiscal cliff. There is sentiment seeming to build that a deal will be reached before the Jan. 1 deadline. If this does indeed occur, we look for U.S. equity indexes to rally to new highs for 2012.
In a very interesting scenario, gold is the only precious metal that has not recovered fully from its massive sell off a couple days ago. Silver has blasted up 60 cents today, trading up 1.78%, and palladium is also up a significant 2.40%. Copper has rallied from a base of $3.40 this month, and is now up 2.21% this morning.
Soft commodities are also seeing large positive trading, with cocoa up 1.3%, cotton up almost 1%, OJ up 1%, coffee rebounding from the key 150 level at up .81%, and lumber leading the way at positive 3%.
We focus on crude oil this morning. We have been calling for an $82 target, but today’s action is a bullish reversal day. We are still not fully convinced of a longer term rally, but if crude indeed traverses the $92 level, we will start to believe a longer term move might occur. Our key pivot is $92. A recent floor seems to be $85.50, and a general risk-on environment plus bullish supply numbers from yesterday’s report is stoking the rally today.
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