Hey Readers,
The market is looking like it wants to snap its major losing streak that occurred for most of last week, but I am not convinced. The futures on the market have continued to dwindle away as the trading day has begun, and there is one key economic indicator that I am looking at as a reason to definitely be worried.
Let’s get into the picks…
Buy Pick of the Day: Direxion Daily Real Estate 3x ETF (DRV)
Analysis: Today’s big story so far is that futures are up. Yet, I am not so convinced we are ready to just run up the market on pretty much no new developments. The market ran itself down on fears over Obama’s banking policy (right or not is up to you) and earnings that were subpar. This morning, we got a mixed bag of earnings from a couple of semi-pros. Halliburton, the biggest name out there, actually reported a 48% drop in earnings. The Asian market was down and the European markets are down even further. Nothing to me looks too bright. This is also why we have seen the futures on the market continue to dwindle away as more players become involved.
The big report for the day is Existing Home Sales at 10 AM. I am not bullish at all about this figure. At the beginning of January, we saw that pending home sales were down 16%, when analysts were expecting a 2% decline in December. The decline from November to December was estimated to be about a 1% drop. It was actually a 15% drop. Analysts are now expecting nearly a 10% drop in existing home sales. Even if the number is close to the expected 5.95 million that is predicted. That drop is an eye sore, and I am pretty worried about the chances that the number will be met. The housing industry is really not in as good of shape as some think.
With the market not being as strong as some think and the housing report, a real estate ETF like Direxion’s Daily Real Estate 3x (DRV) looks to be a nice play. The ETF is already undervalued in pre-market due to the futures, and it presents a great value trade. While DRV does not look as closely at residential real estate, it does have some connection to it. Further, most investors associate DRV with housing data.
Technically, DRV is definitely an overvalued…
