Oh, what a difference a day can make. Yesterday, we had a pop in the market (still low volume) on the seemingly bad news about the construction industry.
Stocks rose even after a measure of confidence among U.S. homebuilders unexpectedly held at the lowest level in 18 months, a report showed today, underscoring that the housing market remains depressed following the expiration of a government tax credit.
And then today, the media reports the following good news and the market tends to the downside in early trading.
Construction of new homes and apartments rose 10.5 percent in August from a month earlier to a seasonally adjusted annual rate of 598,000, the Commerce Department said Tuesday. That’s the highest level since April.
Where it will end up today is still a question. The pundits are telling us the market is waiting with bated breath for the words of the Federal Open Market Committee (FOMC). This august group will pronounce its opinion on the future of our economy, and with that, the market will infer the future of more fiscal stimulus in the way of quantitative easing or the continuing stimulus in the way of low interest rates.
Although I find the gyrations of the market interesting, I also find the schizophrenic behavior somewhat incomprehensible. I mean what is the market looking for in the way of economic news? Certainly, it must not be aware of Moody’s weekly business confidence survey, which has turned upward since the fearful days of August. The summary of this week’s report is below.
The global economic recovery remains intact according to the global business confidence survey results. Global growth appears to have stabilized after weakening this summer at a rate at the low end of its potential. Sentiment is strongest in South America and Asia outside of Japan and weakest in the United States. European confidence appears to be turning a bit softer. The most encouraging aspect of the survey is that hiring and investment intentions are holding up well.
Then again, perhaps today is nothing but profit taking, which is what traders do. After all, we have had more than few good days this September, which, if you haven’t heard, historically is one of the most horrible months for the market. Okay, you historical predictors, how about this – the following year after the 1980-82 recession, the DJIA rose 65%. Think about that.
Trade in the day; invest in your life …
