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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • DOW ABOVE 14,000! By WSS Research Team 0 comments
    Feb 19, 2013 1:49 PM

    By Carlos Guillen

    Equity markets are making a nice start to this shortened trading week as some signs of improving German consumer confidence have helped lift the spirits of investors. Perhaps somewhat offsetting the positive effects from Europe, housing data here at home showed that home builder confidence ticked a bit lower this month.

    European markets were broadly higher today, with the FTSE, DAX, and CAC 40 up 0.96, 1.62 and 1.88 percent, respectively. Clearly, the enthusiasm came from the fact that German investor confidence jumped more than economists forecasted, to the highest point in almost three years, adding to signs that Europe's largest economy is rebounding from its slump. According to the ZEW Center for European Economic Research, its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 48.2 this month from the 31.5 reached January. The result was the highest since April 2010 and landed well above Economists' forecast of a gain to 35. The effects of this positive result have spilled over to stock markets here at home, as reflected by the Dow Jones Industrial Average, which is up close to 50 points, once again breaking above the infamous 14,000 resistance level.

    Perhaps stocks would be even higher during today's trading session; however, U.S. homebuilder confidence dipped from a 6.5 year high. Nonetheless, the homebuilding industry still remains strong as steady job gains and near record low mortgage rates have encouraged more people to buy homes. In general, home prices have been rising as the supply demand dynamic has been favorable for the industry: more on this below.

    In all, today's market action is very encouraging as the Dow appears to be holding above the psychological 14,000 level, perhaps hinting that more subsequent moves to the upside are imminent.

    Home Builder Confidence
    By David Urani

    The NAHB's February Housing Market Index came in with a slight decline to a reading of 46, after topping out at 47 last month. Obviously it's not ideal, but it's still coming down only a little bit from the highest levels since 2006. For me the biggest red flag is that of traffic, which fell to 32 from 36, and was at the lowest point since September.

    That being said, this index is perhaps more of a snapshot of the supply side than the demand side, and it tends to track housing starts. On that note, many builders seem to be restricted by rising construction costs, trouble finding labor, and buyer access to credit. Nevertheless, we're still in the winter lull and we should get a better sense of things when the market starts to heat up again in the spring.

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