After Tuesday’s 16th triple-digit Dow move out of the past 21 days, the market decided once again that it liked the upside and decided to continue the bullish party as well yesterday. As a result, the Dow began with a sharply higher opening of 140 points, then fell down to its “worst” level of the session with a gain of only 71 at 11:40am, which now saw the return of buyers on the former buy on the dip mentality, which had turned into a sell on the rallies pattern until Monday.

Now investors decided that the buy side was the place to be, as this low of the session led to a gradual move higher which then accelerated to the upside at 1pm, leading to a new high at 3:40pm at 178 points before a final 150 point higher close. This now brings the triple-digit scorecard to 17 out of the past 22 sessions with 8 positive and 9 negative. Breadth numbers were strong at a 3 to 1 upside ratio and the VIX declined by a little less than it should have with a 1.26 loss to 17.21.

The big story yesterday was the old “bad news is good news” syndrome, as we got a reversal of the higher bond yields that have been with us for the past month ever since the Fed gave indications that they will start to taper the stimulus programs currently in place. These yields declined for the first time in eight days, which was the longest such streak in 15 months. As a result, the 30-year was down to 3.58% and the 10-year ended at 2.54% and this decline came about as the final estimate of first-quarter G.D.P. was revised lower to a gain of 1.8% from its prior estimate of 2.4%.

The biggest surprise came in consumer spending, which rose by 2.6%, down from the prior estimate of 3.4% and apparently this was the result of weaker spending for health care services. In addition, exports actually declined instead of having increased as originally assumed, and this also subtracted from the final total.

Finally, the pace of inventory accumulation was revised lower, and this added more than one-half of a percentage point to the total. This means that excluding inventories, G.D.P. rose at 1.2%, which would be the slowest level in two years.

Adding fuel to the upside in stocks and lower bond yields was a statement from the Richmond Fed President that he expects the economic expansion to remain “sluggish” for a “couple more years” as the downward revision to first-quarter G.D.P. was in line with his outlook. He expects growth of 2.25% next year.

So after having declined for four out of the past five weeks, the market tried to rectify that situation and so far this week we saw a case of the “good news being good news” on Tuesday in the sense that stocks rallied as a result of better economic reports. And yesterday the mantra was that the “bad news is good news” in the sense that if things are now slowing, then this must mean that the Fed is going to keep the full stimulus programs going for longer than was thought as a result of Monday’s downside stock shellacking and the S&P decline of 5.8% off of the yearly closing highs on that date.

In addition to the G.D.P. news, things calmed down as well due to that China potential credit crunch story cooling off a bit, and remember that the anxiety over this situation was partly responsible for the Dow 353 largest one-day loss of the year last Thursday. So now the cost of locking in China’s interest rates fell for the fourth straight day and money market rates declined there as well. The China central bank said that it has provided financing to some financial institutions in order to stabilize interbank lending rates and will use short-term liquidity operations and existing loan-facility tools to bring calm to the markets.

The Euro got sold off again, down to 1.30, making my upcoming trip to France get cheaper, as E.C.B. President Draghi said that monetary policy will remain “simulative”, which meant that rates there will stay at current all-time low levels. As a result of this and other factors, gold got the downside treatment once again in another large way as it declined to $1,225, a three-year low. But crude oil had the nerve to end a bit higher, above $95, after having been much lower under $94 on larger inventories than projected, but hey, this is the summer driving season and oil participants really cannot give consumers a break in this area.

Advances were sort of spread around among different groups, and these advances were impressive in the sense that they came as some important companies sold off due to poor earnings reports, and this group included BCC, GIS and MON. Of course one stock that was finally revealed as a sort of emperor has no clothes is the one named after a fruit, which broke below what had been a good support level at 400 and ended with a 3 in front of it and the low for the year is 385, which would be the next test if it were to get down that far, and once again it is reverting to the pattern of earlier in the year when it would get blasted to the downside even on days when the market was strong like it was yesterday.

As the second quarter is coming to an end, the S&P is still ahead by 2.2% but is negative for the month of June by 1.7%, which if it does not improve in the final two trading days of the quarter, will break the streak of seven straight monthly advances, which have been the most since September 2009.

Are we going to make it three triple-digit Dow gains in a row after starting the week with a triple-digit decline? The astounding run of volatility continues once again today as are we now back to the “good news is good news” syndrome, which is what we saw on Tuesday but then reverted to the “bad news is good news” syndrome after yesterday’s weaker than expected G.D.P. report but triple-digit gain nevertheless.

Today we got a little of everything, but primarily on the better side, as weekly jobless claims declined by 9,000 to 356,000, May personal income and spending both rose by a little more than consensus as the former gained by its best level since February, May pending home sales rose by more than consensus and the June Richmond Fed Activity Index was nominally lower than expected but this one has never been much of a market mover in the first place.

The Dow began with a 100 point gain right out of the opening bell, similar to what it had done yesterday, and then raced to its best level of the day so far with a 165 point advance at 10:30am, and is currently ahead by 125 as this is being written. Breadth numbers are extremely strong at a better than 5 to 1 positive ratio and the VIX is acting like it was earlier in the year, namely declining by less than it should relative to the market’s advances, as it is lower by .43 down to 16.78.

Of course the one stock that now seems to be locked into a strong downside path is the one named after a fruit, as it has already been lower on 14 out of 19 trading days this month and even today whenever it had the nerve to stick its head into positive territory, it is met by sellers who get more confident that they have the upper hand as it then goes back negative and until that pattern changes, perhaps after next month’s earnings, this one will continue to be the worst disappointment this year despite its cheerleaders in the analyst community with price targets in the 600 to 800 range, and when is this supposed to happen?

And since the market is basically a prisoner of interest rates lately, yields are declining once again, this time with help from another Fed President, today from New York who said that the central bank might have to prolong its stimulus programs if the economy’s performance does not meet the Fed’s forecasts, and I assume that he was referring to yesterday’s weak revision of the final first-quarter G.D.P. estimate. This is another obvious Fed attempt at damage control after they saw the hysterical downside reaction in the markets after Chairman Bernanke’s ludicrous contradictory statements last month to a House panel and last week at his press conference.

The Euro is sort hanging around at 1.30 while gold is trying for the time being to dig in its heels at the $1,225 level with a real battle going on there. Crude oil on the other hand has no problem going higher, now up to $96 a barrel despite huge inventories, and the “explanation” is that weekly jobless claims declined instead of saying the real reason which is that this is crude oil’s function, namely to go higher during the peak summer driving season, especially with the major July 4th holiday coming up a week from today.

The main question for today and tomorrow is whether the S&P can make it eight straight winning months as it needs to close over 1631 by Friday afternoon to keep the winning streak going. It got as high as 1620 when the Dow was at its best level, so tomorrow’s end of quarter trading session is sure to be another barnburner for sure.

Economic reports this week conclude with Friday to end the quarter: June Chicago Purchasing Managers’ Survey, final June U. of Michigan Consumer Sentiment Survey and June NAPM Milwaukee Survey.

First quarter earnings for 2013 rose by 5.4% and the projection at the present time for the second quarter is for earnings to be ahead by 3.2%, and then we will ostensibly see earnings advances of 8.7% for the third-quarter and 13.1% in the fourth-quarter, but these optimistic estimates are a long way off.

The S&P trades at 14.5 times the projected 2013 earnings of $111. Earnings were $85 in 2010, $92 in 2011 and $102 in 2012. The estimate for 2013 represents a gain of 9%. The average P/E multiple for the S&P going back to 1954 has been 16.4 and it has been 14.4 for the last 10 year’s average.

After four consecutive quarters of negative G.D.P. growth, we have had 15 consecutive quarters of positive growth, starting with the third-quarter of 2009, every quarter in 2010, every quarter in 2011, and every quarter in 2012. G.D.P. rose by 2.2% in 2012, and is projected to increase by 2% in 2013, according to various surveys, with 2.5% in the first-quarter and then in the low 1’s for the second and third-quarters before a fourth-quarter acceleration to over 4%.

Donald M. Selkin

Don Selkin is the Chief Market Strategist at National Securities Corporation, member FINRA/SIPC, (NSC) and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, Associated Press}.