Bent, But Not Broken

 

Not surprisingly, after a monster-sized four-week rally, the bulls finally took a break. Even with last week's modest pullback though, it's difficult not to at least lean towards a bullish near-term future. We're seeing glimmers of political sanity again, and we ended the shortened-trading week on a bullish foot. That is, Friday - the only really bullish day of the week - wiped away most of the red.

There are still a couple of key hurdles ahead, and we're still just one bad headline away from the rug being pulled out from underneath the market. But, investors are more confident in stocks now than they've been in weeks. That's a start.

We'll weigh it all below, and formulate a plan. But, first, let's run through the economic news we're getting that hasn't been stifled due to the government shutdown. This is going to be a huge week, with a rate-hike decision coming on Wednesday and January's jobs report due on Friday.

Economic Data Analysis

Between the holiday and the government shutdown, there wasn't a great deal of information released that's worth sifting through here. There are a couple of items worth mentioning, however, that really help us get a grip on where the real estate market is, and isn't.

The first of those data nuggets is existing-home sales, which fell from a pace of 5.33 million in November to an annualized rate of 4.99 million last month. That's the slowest rate seen since November of 2015... and that one was a fluke. Trend-wise, that's the weakest since 2014. Though we didn't get the figure, presumably, sales of new homes are also continuing to falter.

New and Existing Home Sales, Inventory Charts

Source: Thomson Reuters

The one upshot? Inventory of existing homes for sale is burning off, keeping home prices relatively firm. In fact, that was part of the other information we got last week regarding real estate. FHFA is still posting its data, and said home prices continued to rise through November.

Home Price Charts

Source: Thomson Reuters

The S&P/Case-Shiller Home Price Index will be reported on Tuesday, though it's unlikely to vary much from the FHFA's trend. It's not clear when the Bureau of Labor will catch up with its new-home sales reports that aren't being shared during the government shutdown, but it's unlikely to be much different that the existing-home sales trend.

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