Signs of economic recovery continue in housing sector.
Wednesday, December 23, 2009. 9:15 a.m.
I have been saying for more than a year that the problems for the economy began in the housing market, and the recovery would eventually begin in the housing market.
So, while other signs of recovery are supportive, I am most interested in the continuing upside reversal in home sales and home prices, which have now been up for three or four months.
Yesterday’s report that existing home sales rose 7.4% in November, to their highest level since February, 2007, was more of the same.
The stimulus efforts are probably still the major catalyst, since 51% of November sales were to 1st time buyers taking advantage of the government’s bonus plan (and 30% were of foreclosed and “distressed” properties). That could be problematic once those bonuses end.
But they have been extended to next spring, and have been expanded to those who are not 1st time buyers. So it could have quite an effect in lowering the inventory of unsold homes by then, while rising home prices could replace the bonus as a catalyst for continued buying.
At 10 o’clock will come the report on new home sales in November. Forecasts are for an increase of 2.5%.
Yesterday in the U.S. Market.
Once again the market was up right out of the gate, but unlike Monday’s action the Dow rose only 65 points before it gave up most of the gains, then recovered again, then sold off again, and then rallied some in the final hour.
But while the chart looks like a lot of volatility, the Dow traded in a very narrow range of only 65 points from its intraday low to its intraday high, before closing up 50 points, or 0.5%. Not surprising, the holiday week volume was again very low with less than 1.0 billion shares traded on the NYSE, probably mostly by program-trading firms.
Yesterday’s intraday Dow chart:
The Dow closed up 50 points, or 0.5%. The S&P 500 closed up 0.4%. The NYSE Composite closed up 0.5%. The Nasdaq closed up 0.7%. The Russell 2000 closed up 0.8%. But the DJ Transportation Avg. closed unchanged.
The dollar closed up again. And gold closed down (at another new correction low).
Asian markets were mostly higher last night on thin holiday volume.
The DJ Asia-Pacific Index closed up 0.6%.
Among individual countries; Australia closed up 0.8%. China closed up 0.8%. Hong Kong closed up 1.1%. India closed up 3.2%. Singapore closed up 0.6%. South Korea closed up 0.4%. Taiwan closed up 0.6%.
NOTE: If you’d like to see charts of how these and other markets have performed for the week so far, month so far, and last 3-months, click here, and click on any of the market indexes at the left side of the page it takes you to.
Markets this morning:
European markets are positive, up on average of more than 1/2%.
Oil is up $.88 a barrel at 75.28 at the moment.
Gold is up $1 an ounce at $1,087, after closing at a new correction low yesterday.
In the U.S.
This week will be a holiday shortened week, with U.S. markets closing early (1 o’clock) tomorrow, Thursday, and closed all day Friday, Christmas Day. But it has quite a few potential market-moving economic reports coming out.
So far it has been an unexpected downward revision in 3rd quarter GDP revision, but an impressive increase of 7.4% in Existing Home Sales in November.
Today it will be Consumer Income and Spending, released a few minutes ago, Consumer Sentiment at 9:55 a.m., and New Home Sales at 10 a.m.
Consumer incomes rose 0.4% in November, while spending was up 0.5%. Although a positive report, the report has had no effect on the early morning indicators.
Our pre-open indicators are somewhat positive, pointing to the Dow being up 30 points or so in the early going.
Stock Market Patterns.
There is no weekly pattern for this week. The next weekly pattern will be the next ‘monthly strength period’, which is due to begin on Wednesday of next week, Dec. 30, and to run through Thursday, January 7.
And then we will be in the all important 4th quarter earnings reporting period!
Interesting Charts of the Morning.
A look at a few global markets.
Please scroll down to see other recent ‘Interesting Charts of the Morning’.
To read my weekend newspaper column ‘Is the Rally in the U.S. Dollar Real?’ click here!
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