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Stocks edge higher after economic data, with more to come

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The major market averages hold onto early morning gains, but it has been a bit of an adventure. New home sales for March were reported at 10:00 AM and came in at 878,000, which was below consensus estimates of 884,000. The number seemed to have a short-term negative impact on traders as the Dow Industrials (INDU) dipped into negative territory and traded a low of 10,072, but some feel today's "3.1% decline" spooked traders, and the 3.1% decline comes only from a upwardly revised reading of 906,000 for February and not the previously reported 875,000. In essence, when traders heard that new home sales fell 3.1%, they "assumed" it was from the previously reported data and not the upwardly revised February data.

The Dow Jones US Home Construction Index (DJUSHB) did break to a new 52-week high in very early trading at 387.83 after Ryland Group (NYSE:RYL) $106.85 -0.97, jumped to an early morning high of $110.20 after reporting earnings of $1.83, which was well above consensus estimates of $1.20 a share. Yesterday we noted that some stocks in the group had achieved upper ends of their regression channels and might see some technical selling into strength. Ryland (RYL) may indeed be seeing some selling of the good news today, despite the very strong bottom line numbers.

Ryland Group Inc. Chart - Daily Interval

Housing bulls will add Ryland Group (RYL) to their list of homebuilders that had a blowout quarter and beat earnings estimates. It would be hard to day that today's reported earnings were a "surprise" as the stock has been in a monstrous up trend and moved sharply higher in the past two-sessions ahead of today's earnings report.

Jeff Bailey
Senior Market Technician
Option Investor

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