1% Sell-Off

by Larry Levin

In somewhat of a mirror image to yesterday's 1% rally, the indices notched a 1% sell-off today. It wasn't exact, however, since the Dow and S&P500 were down 2% before there was the usual late day rally to cut the large decline in half.

Yesterday I said, "...On the heels of the recent horrific pending home sales data...well...I'm not surprised. Tomorrow morning we'll get more home data; housing starts will be released before the open. If the data continues to deteriorate, a double dip in housing prices will certainly be possible." Today's housing data wasn't horrific but it was worse than expected.

Housing starts in December fell back 4.0%. December's annualized pace of 0.557 million units fell short of the consensus projection for 0.579 million units but was up 0.2% on a y-o-y basis. The December dip was led by a 6.9% drop in single-family starts. Hmm, housing doesn't seem to be getting better yet. Will there be a double dip house price decline?

Clearly housing prices are in a deflationary tailspin. If housing prices were included in the inflation index, rather than owner's equivalent rent (OER), the government would currently be reporting nasty deflationary data. Of course housing prices would be in the CPI and not the PPI, but there is little inflation in the PPI as well. Today's data was near what economists had expected and getting close to negative and is much lower than last month's figures.



Previous Day's Trading Room Results:

Trade Date: 1/20/10

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


1) FT sell @ 12:50pm at 1131.00 = +1.00 (1 lot)

2) FT sell @ 1:04pm at 1131.00 = +.50 (1 lot)

3) Algorithm positions (8)

4) "Reading the Tape" positions (9) ...combined Secret's, Algo, & "Reading the Tape" total...+11.00



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