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Dave Fry\'s Daily Market Outlook image002 (27 03-10)

Builders Slash Prices To Sell More Homes
Sales Up 5.3% In September, But Prices Plunging At Fastest Rate In 36 Years

So screams the headline at MarketWatch today. Homebuilders, as we've suggested, are subject to the same forces as any retailer—too much inventory, cut prices and get rid of it. No doubt their bankers and bondholders are communicating the same message. That means, as bulls have been arguing, it's not the price that matters but the inventory build-up. streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB) was "washed-out" technically in July. Bottom-pickers have been pushing the price higher ever since confirming that few sellers remain. But is there a lot more "up" to this story than just an absence of sellers? Clearly, homebuilders have to build more homes and sell them at a profit for earnings to rise rather than just clearing the decks. (And inventories of unsold homes are still up 14% over the past year and unsold new homes are up 47%, so sales just rising somewhat hasn't made a large dent in the number. As bulls would argue, the trend is reversing silly!)

Dave Fry\'s Daily Market Outlook image004 (27 03-10)

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Now how about some crass self-serving posts?

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Dave Fry\'s Daily Market Outlook image006 (27 03-10)

Now many think we're unhappy with conditions. Why would we be since we have many positions? But there is one disturbing piece of information. As reported here by AMG Data Services, money is still not flowing to the markets despite all the hoopla and grand headlines. Why is that? I guess individual investors aren't buying yet what Wall Street is selling.

On Friday we get GDP data and everything could change. Did Mr. Market forget that September and October are supposed to be bad months? That's why they play the game folks!

Disclaimer: The ETF Digest maintains positions in: iShares Lehman 7-10 Yr Treasury Bond ETF (NYSEARCA:IEF), streetTRACKS Gold Trust ETF (NYSEARCA:GLD), iShares MSCI Malaysia Index (NYSEARCA:EWM), iShares MSCI Brazil Index ETF (NYSEARCA:EWZ), India Fund Inc. (NYSE:IFN), PowerShares Water Resources ETF (NYSEARCA:PHO), iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB) and First Trust DJ Internet Index ETF (NYSEARCA:FDN).

Source: David Fry's Daily Market Outlook