This week should be very interesting in the markets. In fact it could be the most interesting week since June. Last week I thought was a win for the bulls. Yes the market went down but overall I thought it was very frustrating from a bear perspective. The market could have gone down alot more breaking some major resistance but the bulls were able to hold on one more week.
Coming into Monday I would not be surprised to see strength from the markets as the bounce that started late Friday morning potentially continues. Going into Tuesday though, watch out. Existing home sales could really shock some people. The market is expecting a drop in home sales but maybe not enough. From Bloomberg:
Home sales probably plunged in July, and orders for long-lasting goods climbed for the first time in three months as the U.S. strained to sustain the recovery from the worst recession since the 1930s, economists said before reports this week.
Purchases of new and existing houses dropped 12 percent to a 5.01 million annual pace, the lowest since March 2009, according to the median forecast of 54 economists surveyed by Bloomberg News. Durable-goods bookings climbed 3 percent last month, the survey showed.
Wow, a 12 percent drop. Pretty big fall but hardly a plunge.
Compare this to calculated risk.
Housing economist Tom Lawler's preliminary forecast was 3.95 million SAAR (based on a bottom up analysis).
Many of the regional reports showed sales declines of 20% or more from July 2009 when the NAR reported sales of 5.14 million SAAR. A 20% decline from July 2009 would be in the low 4 millions ...
Now that is a plunge. If that number is anywhere near correct, the market may throw one hissy fit. In general I think you sell any strength on Tuesday. Friday also could be a day the market doesn't like if GDP gets revised much below 1.5%.