Housing

by Larry Levin

There was more economic data today with more coming each day this week; culminating in the monthly employment report. Like yesterday's data, today's was another mixed bag. However, the bad news was shockingly bad.

The good news came from factory orders which were much better than expected at 1.1% vs. 0.4%. If one wanted to pick this data apart, they would point to the fact that new orders were very weak, barely positive, and last month's was quite negative thus making the 2-month period a net negative. Moreover, the reason for growth in this data point was due to inflationary price increases.

The next report that came out was so bad it took everyone's breath away. Many on the floor said it was so retched that it must have been a misprint. It was not.

Pending home sales were supposed to be +3.7% but had actually plummeted a staggering -16.0%. This is what the Fed, Treasury, and White House is hanging their collective "collectivist" hats on: HOUSING. And it's falling apart.

The Treasury recently announced an UNLIMITED bailout for Fannie Mae and Freddie Mac after the Fed has become not the "buyer of last resort" for GSE debt, but the only buyer. The Fed has spent over one trillion dollars on this toxic garbage (mortgage debt). And for its part, the White House spent tens of billions more of your tax dollars on a futile handout (excuse me, tax credit) to 1st time home buyers...and it is all failing.

When the housing market makes a second leg down, thus bringing homes to an affordable level in all of the country and not just a few of the current places, the Administration will have already burned through all of our cash and there will be nothing left at the exact time it could have really made a difference.



Previous Day's Trading Room Results:

Trade Date: 1/5/10

E-Mini S&P Trades*
(before fees and commissions):


1) VA buy @ 10:29am at 1129.25 = -.50 (1 lot)

2) 80% sell @ 10:48am at 1129.25 = -1.50 (1 lot)

3) Algorithm positions (2)

4) "Reading the Tape" positions (4) ...combined Secret's, Algo, & "Reading the Tape" total...-1.50



Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!