A positive read on home prices from the Case-Shiller report helped futures initially. However, fears over a new housing bubble have resurfaced causing CNBC to focus their coverage. A poor Richmond Fed and a lighter read on Consumer Confidence helped sellers pushing the markets to their lows of the day. Buyers were more than willing to step for most of the day support the market. However, just after 1:30pm EDT sellers pushed the market lower. Volume was lower on the day was lower, but it would have been nice to see the market hold its gains. The end of day selling was not something we want to see, but we still don’t have enough evidence to suggest something more sinister is at work.
Of course the fundamentalists out there who believe a government shut down would bring down the US Economy are simply trying to invoke fear into the market. Remember not 10 months ago we had the fiscal cliff? Sure volatility spiked, but it was far from a crisis. The best thing you can do is ignore the noise coming from talking heads and focus on price.
We are keeping close tabs on our stocks and the market price action. The positive side happens to be our stocks continue to act pretty well. On the negative side, we do have a high number of stocks in percentage terms above their 20 day and 200 day moving average. This can quickly get resolved with a few more days of consolidation. More importantly, it will be how our stocks act and if they flash any major sell signals. So far, we are okay.
Tomorrow’s economic lineup includes Durable Goods, New Home Sales, and Mortgage Applications. Given the trend of economic reports missing their expectations these will likely to miss tomorrow. Even thinking they’ll miss or even sure they’ll miss gives us 0.0% certainty we’ll nail the market reaction. Doing so would simply be gambling your money away. Stick to the trend, it is still pointed higher.
Stick to holding onto your winners and shedding your losers.
