There’s bad economic data and then there’s bad economic data. This morning brought the latter, with U.S. GDP posting an all-time record decline. One would think that this type of report would send stocks tumbling; and, initially, it did. However, the DJIA DOW (-237), S&P 500 SPX (-18), and NASDAQ (+19) have pared losses, trading well off intraday lows.

Without further delay, here’s a look at this morning’s key economic releases:

Event                                                               Actual              Projected          Previous

Continuing Jobless Claims (July 17)            17.018M           16.200M             16.151M

Core Personal Consumption (Q2)                   -1.1%                   1.0%                   1.6%

GDP (Q2)                                                             -32.9%              -34.1%                 -5.0%

Initial Jobless Claims (July 24)                        1.434M              1.450M               1.422M

As we’ve talked about over the past few months, the Jobless Claims numbers can be misleading due to enhanced COVID-19 benefits. These benefits are due to expire tomorrow. Be on the lookout for a dramatic downturn in Jobless Claims beginning August 13.

No doubt about it, the Q2 GDP data is about as bad as it can get. However, the -32.9% beat expectations (-34.1%). Right now, the pressure is on Q3 GDP. If it disappoints, then risk assets will likely be in for an extended period of pain.

GDP Data Prompts S&P 500 Reversal

Below is a look at the September E-mini S&P 500 as of Wednesday’s close. Since then, the strong week has pulled back and the 78% Retracement (3125.75) is coming into view.

For now, there are two levels worth watching in this market:

• Resistance(1): All-Time High, 3396.50
• Support(1): 78% Retracement, 3125.75

Bottom Line: At this point, my outlook toward the S&P 500 remains bullish. If today’s dreadful GDP data prompts a retracement, then buying the dip may not be a bad way to play the action. 

Until elected, I’ll have buy orders queued up in the September E-minis from 3129.75. With an initial stop loss at 3123.75, this trade produces 24 ticks on a standard 1:1 risk vs reward ratio.