Ok, so what’s up today? The market jumps out of the gate to the upside and it appears it wants to hold there or go higher. I know it wasn’t the news that BofA missed on earnings. No, that news took me out of that trade at a profit and then got me back in some 3% on the downside. Yup, that stock is a trader – up and down, up and down.
Anyway, back to the market and why it might be up today. Could it be the news about the housing market?
- Groundbreaking to build new homes accelerated in December to its fastest pace in over four years, supporting the view that housing is poised to provide a substantial boost to the U.S. economy. The Commerce Department said on Thursday that starts at building sites for homes surged 12.1 percent last month to a 954,000-unit annual rate.
- Permits for future home construction edged higher to a 903,000-unit rate, the quickest since July 2008.
When it comes to fundamentals, it is hard to beat the news above, and I suspect the market agrees with me on this. The housing industry just gives and gives to the economy when it is healthy and every month, it appears healthier and healthier.
Tomorrow, the market will absorb news from China. Could the upswing today be a desire to get ahead of the news from China? Is the market expecting good things tomorrow? Is the market looking toward the fundamentals, once again?
- Investors will now turn to economic reports from China on Friday, including fourth-quarter GDP, December industrial output, retail sales, and house prices, which will offer clues on the health of Asia’s biggest economy.
The fundamentals, you say? With all this market grinding back and forth, who cares about the fundamentals? It is the technical analysis that counts, right? Well, maybe, but keeping an eye on the fundamentals can keep you in the green, as well. In fact, Darrell Jobman has an article in TraderPlanet Today that speaks authoritatively to this very issue. Below is a taste.
- In general, fundamentals control the big picture – the overall direction of prices long term – and every investor/trader should be aware of the fundamentals of the market in which they are involved, no matter what style of trading they decide to use.
I recommend reading the article, as it is an excellent take on an important principle of trading and or investing. http://www.traderplanet.com/articles/view/161474-trading-101-fundamentals-of-fundamentals/?newsletter=1509&distribution=7
I am not sure I agree with the apocalyptic take on the bond market that is gaining traction out there, but I do think a potential problem is afoot sometime down the road, say a year.
- Adding to a rising chorus of analysts warning of a potential bond market crash in 2013, is David Roche, president of Independent Strategy, who says safe-haven government debt is the most “dangerous” asset to own, referring to German Bunds, U.K. Gilts, and U.S. Treasuries.
Finally, I have a big “duh” for you all. Anyone who has followed China’s economic policies knows this has been coming for quite some time, and it is a good thing, not a bad thing.
- China is losing its competitive edge as a low-cost manufacturing base, new data suggest, with makers of everything from handbags to shirts to basic electronic components relocating to cheaper locales like Southeast Asia.
China has long sought to raise the standard of living for its citizens, if for no other reason than to protect its current political structure. Raising the standard of living means rising wages. As I said, “duh!”
Trade in the day; Invest in your life …
