Here we are in front of a few big days in the stock market. First, we get the housing sales for both new and used (ok Existing) homes on Monday and Tuesday. Then we get the Fed’s news on interest rates on Wednesday [Editor's note: Really it's Thursday when the decision comes down]. This is the last week of the month, a traditionally stronger part of the month but anything goes this week.
We have remained short through this decline and the recent correction of the decline and we will remain short through the end of the month as well. We didn’t get into this game to be trading small moves. We want to trade intermediate trends if possible. The stock market has been a treacherous place for most over the past couple of months and we continue to see this as the norm for several months to come.
The next few days will tell us much about the near term course of the market and on this side of it, we can only speculate on the direction the markets will take on whatever the news may be. What we can say is that the past is merely prelude; I guess someone else said that but it is true now. The markets are poised to go down further; we think it’s just a matter of time.
We have said that the housing market is the key to the stock market’s future. That is why we follow the housing stats so much. We find it interesting that WSJ has suggested that the mortgage bunch (read that, housing related jobs) should brush off their resumes and move over to the health care industry, that way it won’t be the “end of the world”. You can imagine the bullishness that backed up that statement. We find health care to be a good industry for the next generation due to the aging of the baby boomers but we don’t see much speculation opportunity at the moment. Maybe all those condo’s could be turned into nursing homes—ok, I’ll stop. Come back tomorrow for some analysis on the new home sales.
By the way, it seems like a long time ago but on Friday the durable goods orders fell a bit rather than the gain that was expected. We recognize that durable goods orders do tend to jump around a bit but they are confirming the housing slowdown—in our opinion, imho.
Be careful out there…
Dow Industrials: 10,989.09 -30.02
TLT: 83.42 (bonds have been under pressure again)
BEGBX: 13.18 (dollar has been stronger)