STRONGER GDP AND FALLING OIL GIVE MARKET A BOOST -- FINANCIALS, RETAILERS, AND HOMEBUILDERS HELP MARKET TAKE TURN FOR THE BETTER

STRONGER SECOND QUARTER GDP BOOST MARKET... At midday, the stock market is holding onto some impressive price gains. One of the drivers is stronger-than-expected second quarter GDP growth. Another factor is a strong performance by financials and consumer discretionary stocks. All are showing short-term chart improvement. Chart 1 shows the Financials SPDR rising to a two-week high and trading back over its 50-day average. Chart 2 shows the S&P Retail SPDR moving up to challenge its 200-day line. Chart 3 shows the S&P Homebuilders SPDR doing the same. All of their relative strength ratios (below charts) are looking stronger. Since these groups have been the biggest drags on the market, new signs of strength are finally starting to give the market some lift. Falling energy prices are another plus.

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ENERGY PRICES ARE DROPPING ... A boost in weekly inventory numbers is keeping energy prices on the defensive today. Charts 4 and 5 show the Oil ETF (USO) and the Natural Gas ETF (UNG) falling -2.5% and -7.7% respectively. As a result, energy stocks are the day's weakest group. Chart 6 shows the Energy SPDR (XLE) meeting resistance at its 200-day average. Falling energy prices are also giving a big boost to airlines and the entire transportation sector. If morning price gains continue through the close today, the market's short-term picture will show definite improvement. We'll take another look after the close.

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