Well the market still remains direction less, though I do have some thoughts on the future direction of the market in the coming weeks.
Last night the housing starts figures were released for the month of April. The headlines throughout the news were news spun a negative view on them straight away, with the DOW furures dropping as soon as it was released. Reading further into them, there was some actually positive news which included the rise of both Single-family housing starts and also Privately-owned housing completions. Its not such a bad thing to have a drop in the housing starts in these economic times, we all know that the US has a glut in supply, and it only makes sense that constructions slows for the time being (not plummets) to allow for the inventories to drop.
I have also noticed that the market isnt falling heavily on this type of news, I suspect that the news isnt considered shocking, in addition people who are cashed up and sitting on the sidelines are becomming frustrated after watching a 60 day+ rally and cant help but dip their toes in...
The good news also continues to flow, with many US companies announcing better then expected results which beat the street estimates. Although the outlooks guideance s are usually a little gloomy, its only their guideance... Im sure they are not going to promise the world, as disappointment is always worse then over achieving.
Another indictor is the VIX. We havent seen the VIX at these levels since October last year. For anyone asking what the VIX is, its the measure of the implied volatility of S&P 500 index options. Here is the VIX chart from the other day. Although the chart is showing a bullish decending triangle, its actually been broken to lower side since I created the chart and now trading @ 28.80
So overall I suspect we might see a few flat trading days of consolidation before we see the next leg up to the 9500 level of the DOW, and the 4200 level of the XJO.
I could be very wrong, but for me there is more good news flowing through into the markets then the bad news. Im not saying the economy is completely in the clear, but those who are sitting on the sidelines waiting for new market lows might be waiting a very long time!
Good luck today, and I will make another post soon when I get the chance.
