9.25.09
Home Market Timing Weekly Updates Weekly Update Archives|
9.25.09 It was a weak week for the Market. Is this the long overdue correction or just a breather? The last time that the market was down two or more weeks in a row was from the middle of June to the middle of July when it was down four weeks in a row giving up 650+ points. If this is the long awaited correction we should see another four to five hundred point ‘give back’ in the Dow 30. If not, we will see 10,000+ on the Dow first. Meanwhile, existing home sales fell 2.7% to 5.10 million homes in August, snapping four consecutive months of increasing sales. The reading was well short of the 5.35 million consensus estimate. The existing home sales report reflects the continued challenges facing the housing market, such as excess inventory, lack of credit and increasing unemployment. Meanwhile, the first time homebuyer tax break is expected to end in November and we expect home sales to drop sharply over the next few months. Also weighing on sentiment this week was news that August durable goods orders fell 2.4%, compared to the expected increase of 0.4%. The drop was largely due to a decrease in aircraft orders, and weaker-than-expected growth of 0.4% in the motor vehicles sector. Nondefense capital goods excluding aircraft fell 0.4%, which was the second consecutive month-over-month decline. The durable goods orders data does not bode well for a strong recovery. On a more mixed note, weekly initial jobless claims fell 21,000 to 530,000, topping the consensus of 550,000. While the ‘beat’ is welcomed, claims remain elevated. The slow decline tells us that many sectors are still feeling the negative effects of the recession and have not been privy to the recovery effort. We need to see a much faster decline if we are to believe the recovery will be sustainable once the government stimulus package peters out in 2010. We still believe the market is being run by the ‘traders’ and you never know where they will take it next. For now, we remain in CASH 100%. Till next time The MTA Staff |
