Today our great nation received exciting economic news. For the first time in over a year, the United States Gross Domestic Product actually reflected a GAIN!
Investors jumped back into the markets, and predictably, the market enjoyed a nice rebound (which created great day trading profit opportunities – more on that later)
So this means the Recession is over, right? If the GDP increased, then a full-blown recovery is under way. Isn’t it?
The answer will surprise you…
The economy has benefitted from a flood of money coming from the Government as part of the infamous Stimulus Package. This is largely responsible for the GDP 3rd Quarter increase.
However, it is yet to be seen if the US economy can continue to grow WITHOUT Government intervention. And there really isn’t a lot of information available to suggest that it can.
Unemployment is still incredibly high, and is forecasted to remain so.
Real estate values are still dropping, and in some areas double-digit home value decreases are still predicted.
Commercial Real Estate in some areas is already down as much as 50% from 2007/2008, and we are really just at the tip of the CRE iceberg – the real Commercial Real Estate meltdown is probably a couple of years away.
Truthfully, the economy still has a long way to go before a true recovery can be claimed – one that is not unnaturally boosted by government intervention.
In reality, the 3rd Quarter GDP increase is probably just a flash in the pan. A true economic recovery – a truly “natural” recovery, is probably still a ways off.
But in the mean time, day traders are getting what they want. The GDP announcement created a fantastic trading opportunity, for those who know how to take advantage of it.
As you have heard me say time and time again, VOLATILITY is the most important word in a Traders vocabulary.
And GDP news ALWAYS creates Volatility.
The Guerrilla Trader
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