Small Profit Taking On Housing Data...

FUNDAMENTAL ANALYSIS
Inventory of unsold homes rose 2.2%, spurring a small profit taking. It is hardly surprising to see inventory of unsold homes rising as nothing has been done in to encourage people to buy homes yet! Mortgage rates continue to be high, people continue to struggle... how would anyone expect a buying spree in the home market under such conditions? That is why I would see the profit taking today as that... just a small one day profit taking with the major stake on tomorrow's FOMC release. A rate cut tomorrow is what will help home inventories go down and stocks go up! :) Well, nothing much need to be said. Odds that the Fed will keep rates steady this time round remains overwhelmingly high.

TECHNICAL ANALYSIS
The Dow ended sideways today as we have expected. It is also head to head against the strong 30MA resistance level now. Even though bullish momentum continue to be strong on our short term indicators, that is by no means any reassurance especially when a resistance level coincides with the FOMC. On a mid term weekly time frame however, we see that the Dow has rebounded off the weekly 30MA line very nicely and would certainly have more upside. So, I would say that short term has become dangerous but mid term prospects continue to be bright. In fact, it is not strange at all to see the Dow pullback slightly if the Feds hold rates steady before moving on further up as the Dow has moved into the short term overbought territory with a gain of over 1.6% in just one week.


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