This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

An Awful GDP Number Could Not Keep the Stock Market From Going Higher.

Stocks in this article: FB NFLX INTC TWTR AAPL X

NEW YORK (TheStreet) -- The downside follow-through in the stock indexes I expected for Wednesday did not materialize. After the drubbing on Tuesday, this resilient stock market closed higher.

The DJIA closed higher by 49.38 points at 16867.51 while the S&P 500 was up 9.55 at 1959.53. The Nasdaq climbed 29.40 at 4379.75 and the Russell 2000 was up 9.44 to close at 1182.68.

This higher close came on the heels of a revised U.S. Growth Domestic Product  number of -2.9%. That was an awful, nasty number. There is absolutely no way that we can get a 3% to 4% U.S. GDP economy, something the Federal Reserve has been counting on.

If the government used a real inflation number it is probably a lot worse.

The fact of the matter is, inflation slows real consumption growth and consumption is 71% of the U.S. GDP. If the government and the Federal Reserve wants you to believe there is no inflation, they are lying to us.

We not only have inflation, it is accelerating. The Fed will not be able to do anything about inflation when it picks up steam.

This has become very clear. The Fed is between a rock and a hard place. If it withdraws easing by tapering the money printing, it will blow up the asset bubbles. If it keeps printing money, inflation will continue to gather strength. As weak data over the rest of the year come in, the Fed will realize it has tapered into economic weakness. This will cause it to launch new money printing, or quantitative easing, QE4, in 2015.

As you can see, there is no way out for the Fed.

So today's stock market move to the upside has me very skeptical. The volume on Wednesday was not very convincing. The technology sector was the leader with stocks such as Facebook (FB), Netflix (NFLX), Intel (INTC), and Twitter (TWTR) leading the way. At this point it appears to be a relief rally.

WATCH: More market update videos on TheStreet TV

As long as the markets continue to believe the Fed will backstop any major downside move, the markets can continue to move higher. Keep in mind, this is an asset bubble that will ultimately blow up. When that will occur is anyone's guess.

I will continue to be cautious and opportunistic in my trading. As I mentioned Tuesday, Apple  (AAPL) was a long position that I was focusing on if the stock gave me an extremely oversold algorithm number. That did occur this morning and I established a long position at $89.84 a share. I also started a short position in U.S. Steel Corp (X), which has an extremely overbought algorithm number.

Risk management with a repeatable process is the key.

At the time of publication the author was long AAPL and short X.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

>>Will GoPro IPO Wipe Out or Live Up to All This Hype?

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs