GOOG Moves to SP 500

The number we were waiting for on Thursday was the existing home sales and they showed a remarkable increase of 5.2%, surprising most analysts including me.  We thought that, given the whole housing rollover concept, housing sales would have been flat to down.  We need to remember that these sales are a bit of a lagging indicator due to the timing of the purchase.  In most cases, these homes were purchased, not in February, but in January.  The sales are then recorded when the closing occurs.  Since January was such a balmy month as some commentators mentioned, the sales for February benefited from that nice weather, in spite of slightly higher mortgage rates.  We tend to think there was a little spur after the holidays when people had the nice weather to shop for houses and a little extra push to get a mortgage rate before they started going up.  On Friday we get to hear about a more current indicator for housing, the New Home Sales report, and February durable goods orders.  The current consensus for durable goods is up 1.5%.

After an early up move out of the gate, the Dow dropped pretty hard after the first half hour of trading and then traded in a fairly narrow range the rest of the day.  In fact, other than the big reversal on Tuesday, the Dow has basically been in a 50 point trading range for a week and a half.  This sort of dull trading will not last for long and since the Dow is now overbought there will be some downward pressure.

In order to try to convince you otherwise, the news out of the SP500 after the close was that GOOG would be added, finally, to the index.  This move has been long awaited by the market and now it occurs after a 25% break in the stock price.  Well, that news was able to lift the price up nearly ten percent after the market closed.  

Be careful out there…and have a good weekend.  

Dow Industrials:  11,270.29  -47.14
RYVNX:   18.96
RYAIX:  22.20
TLT:  88.44
BEGBX:  12.91