GDP to Weigh on Stocks

Stocks took a dive from the high 3900's. We identified 3909 as a likely target in the previous report, and a brief rally was able to hit this target and then some, coming just shy of the 4000 handle, and retracing just shy of a 0.618 Fibonacci retracement of the selloff from the 4000's back in early June. We have since retreated to support at 3825, which is a relative high and strong technical level from a relative high on June 15th. We appear to be hanging on by a thread and the Kovach OBV has slumped. If momentum does not pick up, then we could test lows at 3645. US first quarter GDP came out contractionary, and the second quarter is not looking much better. Recall that two quarters of shrinking GDP is what many use as the definition of a recession.