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US Posts Higher Than Expected GDP

May 30, 2024
Frank Cabibi

The US beat expectations by 0.1% which were significantly lower than last month's number. Today, we'll take a look at the GDP growth trend this year and how this might set up for next week's volatility with NFP.

Bearish Outlook for RUSSELL

The RUSSELL is now our strongest bearish reading on the EdgeFinder. At a -10, there are almost no bullish signals for the small cap index. This month is historically a positive month, and it is still up for the month. However, our scanner is telling us why the index could move lower.

For one, we are likely to have higher rates for longer which affects the small caps more than larger caps like the SPX, NAS or US30 indices. Slower economic growth is going to take a toll on the smaller companies as well. Although GDP beat expectations, we will take a look at what is really going on in the market soon.

Gold finds some good support around the rising trend line on the 1D timeframe. This bullish hammer candle suggests another turn to the upside if we can see a close like this. Gold seems to be reacting to the GDP number in a way that reflects worse economic conditions.

What we saw was a higher GDP than expected. However, GDP growth declined by 0.3% from last month. So investors may be weighing the impact as to what's more meaningful: a 0.1% beat in forecasts or a 0.3% miss from last month's report.

EURUSD is now our strongest bullish thesis on the EdgeFinder. There is a lot of mixed sentiment around the markets right now, but one thing seems to be common: dollar bearishness. Even if the Fed decides to hold rates steady, it's still not great for dollar sentiment.

This is because there are almost no expectations of another hike. So, stubborn inflation and lower growth is just going to look weak on the dollar's front.

Retail Spotlight

Retail is majority short on GER30, USDCAD, SPX and UK100. They still remain mostly long on metals, crypto, and the NASDAQ.

Smart Money Spotlight

The NIKKEI is now the most shorted asset from institutions, and the yen is just behind it. Interest around US indices is not as strong as it was earlier in the year. Meanwhile, NZD, GBP, AUD and EUR are the top buys from COT.

Fundamental Spotlight

GDP growth is a main concern among investors right now. This morning, numbers came out better than expected. However, we have seen a stark decline in growth since March. From 3.4% to now a mere 1.3%. This is not a good sign for the US economy despite how many forecasts we beat. As long as the trend continues downward, the dollar will likely weaken and it could take a toll on US stocks too.

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