October 17th, 2012
in Gary's blogging
Opening Market Commentary For 10-17-2012
The SP500 futures fell from yesterday's close of 1454 after this mornings batch of reports including decent numbers for housing starts and building permits (see chart below). The new housing starts, considered a blowout number by some, is the highest since July 2008 at +15% considering the expected number of +2.4%. However, my gut feeling is that theses numbers representing new building, while accurate, are jumping the gun going into an unknown financial future. My thoughts – we will see.
I mentioned yesterday that $RUT had gaped up and that would soon be recovered with a down market. Well, the USD gaped down this morning (from 79.40 to 79.24 and the FX markets ALWAYS cover gaps in a timely manner. Although not a lot, but this ground will be covered. Probably today as the futures are reacting badly to the otherwise good financial news.
If you are the gambling type this could represent a good setup for a quick scalp.
“More on September Housing Starts: Both starts and permits post their best numbers since the summer of 2008. August's gains are revised higher to +4.1% from +2.3%. As hoped, it appears housing starts are catching up to large previous gains in builder confidence.”
Not everyone is ecstatic over the 'blowout' numbers as we can see here in the next article. ZH may be partially correct in assuming these numbers are politically skewed, but I think builders are jumping the gun while 'expecting' a recovering market in a dimly lit future.
The pre-election barrage of "six-sigma" economic beats continues, with today the trophy going to Housing Starts, which soared by a whopping 15% from a revised 758K to 872K. . . The numbers being thrown about are so ridiculous they are almost credible in their political talking point ridiculousness.
Expect this outlier printing to continue at least until the election. In the meantime, prepare for a barrage that housing start soared to the highest since July 2008.
Looking inside the numbers, the print for single family rose to 603K from a revised 543K, while multi-family houses increased to 260K from 208K.
The geographical breakdown is as follows Northeast down 4K to 75K, Midwest modestly higher to 143K from 134K, West a little more higher from 169K to 203K, and the biggest surge was in the South from 376K to 451K.
At this point the best one can hope for is for a return to some normal data reporting after the election, because it is now obvious that every data series will be skewed and 'seasonally adjusted' substantially higher.
Curious why BofA charge-offs are already soaring thanks to the Housing Bubble 2.0? That's why.
The RRR** was very narrow at the opening bell, just as it has been for the past month. Any trades today will probably end up on the unprofitable side as long as this market remains flat or continues to have low volume.
I have issues with some traders in that they are saying there are setups for day trading. This is true enough, but the trading range is so narrow that way too money has to be put on the table just to get back meager gains.
Swing trading is also at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly. Guessing where the market is going to be tomorrow or next week, at this time anyway, is a foolish endeavor.
The DOW at 9:35 is at 13508 down 44 or -0.33%.
The 500 is at 1453 down 1.37 or -0.09%.
The $RUT is at 836.22 up 0.71 or 0.08%.
SPY is at 145.49 down 0.05 or -0.03%.
The longer trend is up, the past week's trend is bearish and the current bias is down.
WTI oil was up today and is at 92.39 trading between 91.90 and 92.77 and the bias is negative.
Gold is down this morning. Currently trading down at 1745.42, trading range is between 1753.12 and 1744.55 with a negative bias.
Dr. Copper is at 3.70 down from 3.72 earlier.
The US dollar fell from 79.57 earlier to 79.00 and is currently trading at 79.12. (Gap starting at 79.41)
** RRR = Risk Reward Ratio
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Written by Gary