So just as a week ago Monday, a dramatic late day reversal led to zero consequences on Tuesday - even though the textbooks say it should. But the textbooks don't account for the power of the 'urgent buyer' who is with us most days in premarket.
As long as this 200 day holds, bulls still have the ball in their court, but as I noted the past few weeks I would feel more comfortable over 1120. We had that for a few hours yesterday but the close is what counts, not the intraday pricing.
Waiting and watching for now. Existing home sales at 10 AM but bad news has been digested and ignored very quickly the past 3 weeks so let us see if it the news is below expectation how the market acts and if there is a change in character.
EDIT 10:15 AM - Existing home sales disappoint but after some pullback the market shrugged it off, just like all bad news of late. Still holding 1110. The tax credit has really mucked up the numbers but let me stress if you are not seeing aggressive purchase of homes in April, May, June, July - the height of transactions, you've got issues.
- Sales of U.S. previously owned homes unexpectedly fell in May, a sign demand was probably pulled into prior months before a June tax-credit deadline. Purchases of existing houses, which are tabulated when a contract closes, decreased 2.2% to a 5.66 million annual rate.
- The decline raises the risk the retrenchment following the expiration of the tax credit will be deeper than anticipated. “Housing is extremely weak and vulnerable,” John Herrmann, a senior fixed-income strategist at State Street Global Markets in Boston, said before the report. “We’re heading into a soft patch.”
- Existing home sales were forecast to rise to a 6.12 million rate
Year over year we only saw a 2.7% increase despite lower mortgage rates, continued bribery by government to buy homes and a period of "recovery" versus May 2009 when we were in the depths of the Great Recession. Not exactly promising growth..