Insights

Slow Day on the Street

Two of the four economic releases today showed a weak housing market after yesterday’s market experienced a modest rally off of the Existing Home Sales report.  A confirmation of the Existing Home report with strong numbers from the MBA Purchase Applications or the New Homes report would have been very bullish for the market, but as it is, the lone solid number from yesterday looks like an outlier.  The question is, was yesterday’s number the outlier or today’s?  Reading the reaction of the home-builder stocks, the rise yesterday was more than the drop today, so we can say the market thinks the positive trend illustrated by yesterdays number to be the path.  Over two days Pulte Homes Inc. (NYSE: PHM) is up 64 cents (+6.8%, $10.06), Ryland Group Inc. is up 80 cents (+4.05%, $20.54), D R Horton Inc. (NYSE: DHI) is up 38 cents (+3.54%, $11.12), Toll Brothers Inc. (NYSE: TOL) is up 77 cents (+4.19%, $19.15), Lennar Corp. (NYSE: LEN) is up 41 cents (+3.19%, $13.27) and Beazer Homes USA Inc. (NYSE: BZH) is up 3 cents (+0.60%, $4.99).

The market was very slow today with the biggest action coming at 10 a.m. when the New Home Sales number was released.  That number came out below expectations and the market sold off immediately with the Dow Jones Industrial Average dropping 30 points within the next 24 minutes.    The DJIA has dropped faster and farther many times so even this action, though it was the quickest move today, was not much.  The DJIA finished up 1.51 points (+0.01%, 10,466.44) on a day that probably drove day traders crazy and cost them money.  The S&P 500 added 2.89 points (+0.25%, 1,120.76) and the still outperforming Nasdaq 100 gained a decent 12.48 points (+0.67%, 1,851.99).

The New York Spot price for gold gained $3.80 an ounce ($1,087) after being up more than $12 during the day.  The SPDR Gold Trust (NYSE: GLD) was strong most the day, trading as high as $107.45 before gradually declining into the close at $106.55.  There was a sale of about a half-million shares in the last minute of trading that dropped the stock almost 30 cents.

Nymex crude jumped $2.20 a barrel (+2.96%, $76.60, 4:11 p.m.) on inventory supply data and dollar weakness.  The dollar opened lower today lending to the strength in gold and oil.  The dollar-euro relationship has traded to within 25 cents of its 200 day moving average and some say this may mark the end of the recent dollar rally.

Tomorrow we get Durable Goods Orders (0.5% expected) and Jobless Claims (470,000) at 8:30 a.m. and Natural Gas inventory levels at 10:30 a.m.

Friday the markets are closed for Christmas.