2nd Quarter GDP really disappoints!

This morning the Commerce Department released its numbers on the economy. Gross domestic product rose at a 1.3% annual rate in the second quarter following a 0.4% gain in the prior quarter that was less than previously estimated. What's even more striking to me than the 2nd quarter low number of 1.3% is the revision to 1st Quarter numbers. The 1st quarter numbers previously reported were 1.9% and now have been revised downward to 0.4%. That's a very large difference. In fact, for all practical purposes that's basically close to negative growth and if this quarter gets revised downward by Sept, it may have shown we are in a Recession right now.The official definition of a Recession is 2 consecutive quarters of negative growth.

If it smells like a recession, feels like a recession, and speaks like a recession, it most likely IS a recession!

In the mean time, the Futures markets are predicting today to be a significant stock market drop again. Hold on to your hats!

Consumer Sentiment data for July was also released and came in at a 63.7, which compares to a 63.8 reading for June. Again, not in the right direction for a recovery.

Watch the rise in those TZA Call Options today for October Expiration at a Strike price of $41. I said we could see $6.00 for those which you could have bought for $2.69 just last week.

UPDATE: 6:53am PST

The Chicago PMI came in at 58.8 this morning for July. The month of June came in previously at a 61.1 reading.

Market summary for June 22, 2009 and comments

Today the market dropped on the Dow 202 points closing at 8,339, while the Nasdaq closed down 61 to finish the day at 1766 and the S&P 500 closed below 900 for the first time since May 27th, closing at 893. The Volatility Index closed at 31.17 after hitting a high of 32.05 earlier today. The Put to Call ratio closed at 0.92 while Gold closed at 923, down 12 dollars/ounce. The signs have been there for weeks since the Candlestick pattern on June 5th showed the first sign of market reversal, and then was confirmed again on June 15th, as I wrote in my post on both days. Both the Dow and the S&P 500 are now below the 200 day Moving Average again.

Meanwhile, contributing to the market decline today was this little tidbit: World Bank Says Global Economic Recession to Deepen from Bloomberg news. And I quote, "The world economy will contract 2.9 percent, compared with a previous forecast of a 1.7 percent decline, the Washington- based lender said in a report today. Growth will be 2 percent next year, down from a 2.3 percent prediction the bank said."

Also in the article was this: "The World Bank cut its forecast for the U.S. this year, calling for a 3 percent drop in the world’s biggest economy, after predicting a 2.4 percent contraction in March.

Japan’s gross domestic product will shrink 6.8 percent, more than the previous prediction of a 5.3 percent decline, the lender said. The euro area’s economy may shrink 4.5 percent, compared with the previous estimate of a 2.7 percent contraction.

Global trade may drop by 9.7 percent, compared with a March forecast of a 6.1 percent decline.

I do expect the Dow to go below 8,000 and the S&P 500 to go below 840 as well. Options Expiration for the Quarter in June 30th and I do not know what the effect of that will be on the market.

One other piece of news I thought was relevant was this gem: "Insiders Exit Shares at the Fastest Pace in Two Years." I have been saying this was one of the reasons I thought the market was headed down and wrote so on many occasions. I receive 2 reports daily on Insider Buying and selling from J3SG.com and for months it has shown the dollar amount of Insider Selling far exceeded the dollar amount of Buying for any given day. I had posted the theory, how can things be really getting better in the economy if so many Insiders who have most likely lost money like the rest of us, are selling their company stock. If they saw Green Shoots and recovery wouldn't it make sense to be buying more shares of their company stock? Anyway, read the "Insider Exit shares at the Fastest Pace in Two Years" article and conclude what you will. I am still holding my ETF Ultra Shorts Triple pay of the Small Caps, symbol TZA, as well as the Ultra Short Triple lay of the Financials, symbol FAZ.

The market should just be in the beginning phases of a eventual retreat to 7,300 lows or lower by the end of October.

Take Mini poll: How long will the recession last?

There is only 2 days left before I summarize the data from the mini poll to the right of this post. I will summarize the data and compare it to December and January's summary. So if you haven't yet taken the poll please do. Thanks and return here on March 2nd for the summary posting. I believe you will find the data interesting.

Vote here on when the recession will end.

Lots going on this week to affect how you might feel as to when the recession will be over. Please take a moment and vote in my Mini Poll to the right of this posting.

The morphing of language by President-Elect Obama's writers.

So I went to President-Elect Obama's transition page and saw a piece on the "deepening recession". Please do not use this language as it is easily morphed and reminds people of "Depression" The alliteration is too anxiety producing. Some suggestions you might try are the "worsening recession", or the "continuing recession" and you might try some messages which don't define the problem, but instead, give us some suggestions as to how we can help slow it down or reverse it. In those situations feel free to use some positive alliteration. Thanks!