SHORT TERM: market ekes out a marginal gain, DOW +22
First a clarification. The housing market is certainly in a recession of paramount dimensions. Sales were up in October due to price cuts. There is an 11 month inventory of houses to be sold. Quite large by historical standards. As a result, banks have contracted credit to all sectors of the economy. One of the main reasons for the credit crunch. The housing index has been making new lows nearly every week recently, including this week. For the overall economy, however, no recession.
The market opened to the downside this morning after the revised Q3 GDP was raised to 4.9%. This is what I meant by: recession? Just past 10:00 the SPX traded down to 1458, the low for the day, and holding the support pivot at 1462. After the SPX hit its high for the day around noon at 1473, it was a choppy session into the close. At the close the SPX/DOW were +0.10%, and the NDX/NAZ were 0.25% higher. Bonds closed up 27 ticks, Crude was up 40 cents, Gold dropped $7.40, and the Euro was lower. Support for the SPX remains at 1462 and then 1438, with resistance at 1484. Short term momentum is now displaying a negative divergence at today’s highs. Overall the market was mixed. The techs did well, but every leader in the financial sector was down spare Citigroup, and the XLF closed lower. Thus far, this rally is not too convincing. End of month window dressing possibly, last day of November tomorrow. Two FED speeches tonight, and another tomorrow in Philly at 11:30. Tomorrow the core PCE will be reported, as well as the Chicago PMI. Best to your evening!
MEDIUM TERM: correction
LONG TERM: bullish