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Consumer confidence falls in November

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The Conference Board said consumer confidence in November fell to 82.2 as Americans continue to worry about their job security. Today's reading is lower than the October level of 85.3 and lower than estimates by economists of 86.4. The Conference Board's consumer confidence survey has now fallen 5 months in a row.

While consumers remain relatively pessimistic toward the current economy, confidence in the future is beginning to show signs of improvement. The present situation index fell to 93.5 in November, from 107.2 in October and 179.7 a year ago. The expectations index rose 74.6 in November, which was higher than October's reading of 70.7, but still below last year's reading of 101.2 for the same period.

According to Realtor.com, the average rate for a 30-year fixed rate mortgages is at 7.05%, while a 15-year fixed rate mortgage is around 6.52%. Both rates are about 50-basis points higher than earlier this month.

Existing home sales rise

The sharp decline in longer-term Treasury bond yields in early November didn't dampen existing homebuyers as lower mortgage interest rates gave buyers some leverage. Today's existing home sales came in at 5.17 million, which was above estimates of 4.9 million. Today's report on existing home sales was higher than October's 4.9 million.

Dampening on stocks

Today's "lack of confidence" has stocks under some selling pressure and it looks as if "Dow 10,000 will have to wait." In the early morning session, we were seeing some selling in the longer-end of the Treasury bond market, but YIELDS there have since reversed and now hover near the unchanged level. This gives traders hint that there is some near-term defensive action being taken.

The broader market averages are in negative territory as are the many indexes we follow on a daily basis.

The CBOE Internet Index (INX.X) is leading the decline with a 5% loss at $136. Retracement support here looks to be the $123 level, with resistance at $145. In the past 6 sessions, the INX.X made two attempts at $145, but failed their rally. A pullback near $123 would not be a surprise.

Other technology group are showing losses of roughly 2.5%. Software (GSO.X), Semiconductor (SOX.X) and Networking (NWX.X) are trading down in step with each other.

Tech sectors showing some relative strength right now are Biotech (BTK.X) -1.57% and Disk Drives (DDX.X). Yesterday, the Biotech Index (BTK.X) matched a 5-month high, but that came right at our 191% retracement bracket. Regression channel support looks to be near $585, with retracement support at $563.

Jeff Bailey
Senior Market Technician
Option Investor

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