Stocks are higher, but off the best levels of the day. It appears that crude oil above the $62/bbl level has partially offset the good news of stronger than previously reported GDP, pegged at a 2.2% annual rate in Q3. Housing data may also be moderating stock gains with a larger than expected 3.2% slide in new home sales reported this morning. We remain in the camp which believes housing market woes will be severe enough to cause a contraction in economic growth by mid-year next year. That, of course, flies in the face of the wisdom of the big crowd economists out there - not the least of them - Helicopter Ben Bernanke.
While stocks are off the best levels, this is a seasonally positive time for the market, volatility is slipping again, and so it is likely that the uptrend will continue at least through the month of December, before we get another batch of earnings reports in January. Especially close attention will need to be paid to the dollar, or really the Euro. A further sharp Euro advance could mean further stock market disruptions similar to the declines on Friday and Monday. For now, March Euro futures are down a quarter-percent with $1.3200 showing solid support. The dollar selling breather today is keeping the gold bulls on the defensive with the metal down $2/oz.