More Indications of Housing Market Recovery...

The Dow gained a marginal 15 points today as new home sales continue to paint the recovery in the housing sector.

The US housing market, which has been on the downhill for years, have been showing signs of a bottom in the past few months. Indeed, a healthy housing market is essential to the overall health of an economy and a recovery in the housing market at the bottom of this economic crisis certainly makes the economic recovery much more credible. Investors would be looking forward for more confirmations of economic recovery from Wednesday's Durable Goods orders and Thursday's Jobless claims (see stock market calendar). Following which, investors will take a first look at Q2 GDP on Friday.

Even though the housing data was extremely healthy, the stock market didn't react much to it. In fact, most of the day was ruled by the bears, suggesting that the market is indeed short term overbought and ready to pull back a little. Yes, I don't see much more short term strength in the market without at least testing the 200 days moving average again soon. For now, the Dow remains in all out Bull Trend (make no mistake, this is the early stage of a new bull trend).