Existing Home Sales & Stocks Fall

Wednesday, July 20, 2011
Stock Market Commentary:

Stocks were quiet on Wednesday as investors digested mixed economic data and AAPL’s strong quarterly results. Technically, it is encouraging to see the major average find support and stay above their respective 50 DMA lines. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.

Existing Home Sales Fall, IPO Market Is Strong, Earnings Are Mixed, & Debt Woes Continue!

The up and down ride continued for the ailing housing market. The National Association of Realtors said existing home sales slid -3.8% in May to an annual rate of 4.81 million. The year-on-year rate tanked to –15.3% from April’s negative -13.8% reading. The closely followed supply gauge rose to 9.3 months from April’s 9.0 months which is not ideal. It was somewhat encouraging to see the median home price rise +3.4% to $166,500. The Mortgage Bankers Association said mortgage applications jumped last week for the  largest increase in four months thanks in part to a flurry of refinancing and low interest rates.

The IPO market remains encouraging with two high profile company’s topping estimates on Wednesday, Zillow (Z) and Skullcandy (SKUL) both began trading near the top end of their ranges which is encouraging. On the political front, investors are looking forward to see lawmakers reach a deal to raise the debt ceiling and curb spending. In Europe, German Chancellor Angela Merkel met with French President Nicholas Sarkozy in Berlin ahead of another meeting of EU leaders to find a solution to Europe’s crushing debt woes.

Market Outlook- Uptrend Under Pressure:

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the current rally is under severe pressure as investors patiently await earnings season and continue to digest the latest economic data. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.

 

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