ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Stock Market Commentary A curious break in the trading action unfolded as financial markets wrestled with two “disappointing” inflation reports. Both the CPI (consumer price index) and wholesale inflation (the producer price index or PPI) came in slightly higher than “expected” (headline and core). The data just tell me expectations are unrealistic or at best … Read more
Housing Market Intro and Summary What happened in the housing market in February, 2024? Breakouts and bottoms happened. In my previous Housing Market Review, I posited the possibility of a top in the seasonal trade on home builders. In the subsequent month, the stocks of home builders took on new life as investors forgot about … Read more
Housing Market Intro and Summary In recent months, the housing market experienced several impacts from declining mortgage rates. An accelerating improvement in consumer and builder sentiment point the path toward a strong spring selling season despite on-going issues of affordability and inventory availability (in the existing home market). While housing starts pulled back from November’s … Read more
Stock Market Commentary Instead of climbing a wall of worry, the market is climbing a wall of frustration (I stole that from a friend of mine). No matter what economic indicators bears stare at to declare impending doom, the jobs market just keeps coming in hot month-after-month. While a widening swath of stocks are breaking … Read more
Stock Market Commentary A bearish divergence is well underway in the stock market. While the S&P 500 and NASDAQ rally, a key bearish trading signal persists in market breadth. The previous week, market breadth created a strong bearish signal by slicing below the overbought threshold. This key bearish trading signal was reinforced by last week’s … Read more
Housing Market Intro and Summary Of all the November housing data, housing starts provided the clearest support for the sharp rebound in the stocks of home builders the last two months. In parallel, builder sentiment has likely bottomed in anticipation of the positive impact of falling mortgage rates. On the other hand, existing home sales … Read more
Stock Market Commentary For traders like myself who follow market cycles from extreme fear to extreme euphoria, last week’s trading action was astonishing. The stock market was already well overbought and stretched going into Wednesday’s Federal Reserve meeting. Yet, buyers STILL managed to go into extreme stretch mode. The Federal Reserve essentially declared the death … Read more
Housing Market Intro and Summary The October housing data showed some further softening, including a revision of the new home sales data that erased a breakout. Yet, November was a blockbuster month for launching the seasonal strength in the stocks of home builders. Many of these stocks hit all-time highs in a race ahead of … Read more
Housing Market Intro and Summary I thought the advantage of new home sales over existing homes was coming to an end soon. The data suggest otherwise. New home sales surged to an 18-month high while existing home sales fell to a 12-year low. The resilience continues for new homes and most builders. The stock market … Read more
The bear market intrusion to the oversold period gave way to an explosion of bullish trading action this week. The maximum drawdown of October for the S&P 500 (SPY) was 4.0% well above the average for the month. This extreme move provided the perfect setup for the sharpness of the current oversold bounce. The rubber … Read more