U.S. stocks are clawing their way back from an early morning swoon and the major indices are close to unchanged levels. Investors were digesting a second look at U.S. second-quarter GDP and the weekly jobless numbers. Volume continues to be light as we wrap up the last few dog days of summer. The bond market had their eyes on the $28 billion Treasury auction of 7-year notes. The bid-to-cover came in at 2.74 (to 1) indicating strong demand.

Asian markets were drifting lower. After recently hitting a ten-month high investors were taking profits in the Japanese market ahead of the August 30th general election. Polls show that the opposition Democratic Party is expected to win over the more conservative Liberal Democratic Party, which presents a possible shakeup for the country's government given decades of LDP leadership. The NIKKEI index lost 1.5% on the session. The Hong Kong Hang Seng gave up 1.0%. The Chinese Shanghai lost 0.7%.

The European markets were also contracting as traders continued to take profits following ten-month highs on Tuesday. The economic data out of Britain was mixed. Home prices were inching higher in August. Yet the CBI said more than half of the country's retailers surveyed saw sales fall in August. The trend of sliding retail sales is expected to continue. Overall European markets delivered a rocky session that ended in a late afternoon slide. The English FTSE index lost 0.4%. The French CAC-40 lost 0.5%. The German DAX gave up 0.9%.

The U.S. Commerce Department released their revised look at second-quarter GDP, which came in unchanged at -1.0%. Many economists were expecting GDP to be revised lower to -1.5%. The news is relatively positive and reinforces growing expectations that the U.S. economy will bounce into positive territory for the third quarter. Should Q3 GDP come in positive it will (technically) end the worst recession since World War II.

While not necessarily a market mover the weekly jobless numbers came in a little worse than expected. Economists were forecasting a drop to 565,000 new jobless claims. The seasonally-adjusted number came in 570,000, down 10K from an upwardly revised 580,000 the week before. Meanwhile workers on the list for continuing claims fell from 6.25 million to 6.13 million, the lowest reading in four months. The next look at employment will be the non-farm payroll data on Friday, September 4th.

There remains a lot of focus on the U.S. dollar, which is slipping today. Yet the weakness in the dollar is not helping commodities this week. Oil continues to fall and is currently trading under $71.00 a barrel. Silver, copper and grains are lower while gold is bucking the trend with a minor gain. Natural gas happened to hit a new seven-year low this morning.

Currently the S&P 500 is off less than four points at 1,024. The NASDAQ composite is down about 17 points near 2,007. The Dow Industrials are actually up about two points near 9,546. The small cap Russell 2000 is down less than seven points at 577. Overall the short-term trend this week is a bearish one of lower highs. The best sector performers today are the banks and the defense stocks. The worst performers are biotech, airlines, oil services, and the homebuilders.

Let's take a quick look at charts for the major averages:

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index:

Scanning the OptionInvestor.com play list for movers I see that AAPL's dip to $165 has hit our trigger to buy calls. Tobacco stock LO has fallen through what should have been support near $75.00. More conservative traders may want to exit their bullish positions. The dip in the oil services sector pushed OXY to $71.87. We had a trigger to buy calls at $72.00. Solar stock FSLR, a put play, continues to sink with shares losing more than 2.2%. Meanwhile Chinese stock SNDA has rallied above resistance at $50.00 and hit our new stop loss at $50.25.