Courtesy of John Nyaradi
As we head into the closing days of the year, bad news came at us from all corners of the world today.
At home, the Case/Shiller Home Price Index came in with its fourth monthly decline in a row, dropping -0.8% on an annual basis in October and -1.3% on a monthly basis. 18 out of the 20 cities included in the report showed declines, with six making new lows since the housing collapse began more than three years ago. This is truly a miserable report that came in below expectations and demonstrates the ongoing weakness in this all important sector.
At the same time, interest rates rose today in both the 10 year and 30 year bonds (TLT) dropping the ETF by -1.96%, while a weak 5 year auction drove up rates in that asset class to the highest level in eight months. Analysts generally have a bearish outlook for tomorrow’s 7 year auction.
Consumer confidence dipped to 52.5 versus a previous 54.3 and expected 56.1 which conflicts with the 5.5% increase in retail holiday spending, but most concerns in the report seemed centered on jobs and employment which should come as no surprise to anyone.
Overseas, the Shanghai Composite (FXI) (PEK) shed -1.7% and so continued its recent correction, now falling below its 200 day moving average. As we’ve discussed before, the world’s fastest growing economy is more and more often being viewed as a leading economic indicator for the rest of the world.
U.S. markets were mixed with the Dow Jones (DIA) reaching the highest close since August, 2008, while Gold (GLD) closed at $1406/oz.
So while most of Wall Street is on vacation and trading volumes are low, bad news continues to slide in under the radar screen. On a technical basis, the major indexes remain vulnerable to a correction and are overbought with high RSI and Stochastic readings flashing warnings of an impending correction.
Wall Street Sector Selector remains in “Yellow Flag” status, expecting choppy to lower prices ahead.
Let’s enjoy the rest of our Holiday week because January 3rd and beyond could prove to be interesting days, indeed.
Wishing you a wonderful New Year,
