The DJIA was up over 70 points in early trading. However, the index could not hold onto those early gains and finished down on the day by 31.75 points at 16880.36. The S&P 500 was up fractionally at 1970.07. The Nasdaq closed higher by 20.20 points at 4462.90, led by the momentum favorites Facebook (FB) and Twitter (TWTR). The Russell 2000 closed higher by 4.93 points to 1146.57.
The second-quarter preliminary GDP report was released and showed a roughly 4% increase. On the surface, this numbers looks fantastic. The number will be revised lower as we move forward but it appears the U.S. economy is gaining strength. I say, not so fast.
The U.S. GDP for the first half of 2014 is 0.87% annualized. The Wall Street pundits were looking for an increase of 3% to 4%. I believe the GDP is also slowing again sequentially in the third quarter.
So, I will stay with my "growth slowing, inflation accelerating" macro theme for 2014. I am surely in the minority with that forecast. However, the growth slowing indicators are what they are. Aside from Wednesday, the leading sectors in 2014 continue to be the utilities, energy, precious metals and real estate investment trusts.
The stock market is now confused as to which direction it wants to go. The DJIA and the S&P have been in a profit-taking mode while the Nasdaq and Russell 2000 are forging ahead. This is a two-tiered market again; the DJIA and S&P versus the Nasdaq and Russell 2000.
The DJIA is now sufficiently oversold according to my algorithm numbers that a turn higher should be expected over the next day or two. The question becomes, will we get a rotation out of the Nasdaq and Russell 2000 stocks into the DJIA and S&P stocks?
This is a traders market. This is no time to commit for a longer-term investment. The volatility, as highlighted by the CBOE Market Volatility Index (VIX.X), is once again at the forefront.
Thus, stay focused and continue to buy those oversold sectors and stocks that are highlighted at www.strategicstocktrade.com.
At the time of publication, the author was long FLO and LRCX, although positions may change at any time.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.