Stocks got off to a strong start today but still managed to spend most of the session in negative territory. The Federal Housing Finance Agency said U.S. home prices fell 0.5% to a six-year low in July and that helped convince investors to take some profits off of the table. The government also announced that domestic prices are down a year-over-year 3.3% – meaning homes in July were priced on par with homes in September 2004.
The SPX did manage to stay above the recent breakout level of 1131 but the level was tested several times today. Tomorrow we will get jobless claims number and that will help shape the session. Volume remains on the light side and the past two days should be viewed as healthy consolidation after a nice rally.
We remain cautiously optimistic but you have to be prepared for a pullback. If 1131 gives way, we could see the index retrace all the way back to 1117.
Weekly Economic Calendar:
- The report on new jobless claims will be released. Later in the morning, we’ll learn about how many existing homes sold in August, and the Conference Board will unveil its leading indicators index for August. Rite Aid Corp. (RAD), Nike Inc. (NKE), and Saba Software Inc. (SABA) will report earnings.
- Durable goods orders for August and new homes sales for August will be released. KB Home (KBH) will release earnings.
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