It looks like we are having a month-end trading rally today. There are not many news, and the rally is thought as purely technical.
Although the new homes sales number came lower, months of supply is lowered to 6.6, which is close to the average. May that indicate we are at the bottom for the housing market? The construction will be the main driver of employment, so homes and infrastructure bears our attention to foretell employment gains. Lennar Corp. last week made positive comments and today it is testing resistance. Sherwin-Williams is also testing resistance. Let’s watch for a change in direction.
Merkel’s comments to isolate Greece does not make sense because Greece isn’t the only problem. Greece is just the problem whose resolution will foretell how sovereign debt issues will be handled in the future in the eurozone. Therefore, the solution to Greek sovereign debt problems has to be structured to solve all of the fiscal debt issues in Europe.
The Market with a month-end rally
American market had a choppy trading day with a rally of over 1% near the end of the trading day on light volumes. And about 3/4 of that rally happened in the last half hour of trading. We are close to resistance levels from last week. Last trading day of the month is Friday and Jewish holidays are Wednesday night thru Friday. So volumes will be light towards the end of the month. Any rallies might be an opportunity to sell going into October.
As a side note, overnight Asian market were down. Particularly some Hong Kong stocks broke their 52-week lows and are testing their 2008 lows during the financial crisis. This shouldn’t be taking lightly and is indicative of a major slow down in the emerging markets.
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