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Construction spending rises 0.3% in November

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The major indexes got a boost higher at 10:00 AM EST to their best levels of the session after the Commerce Department reported that construction spending rose 0.3% to just over $843 billion in November, which was slightly higher than the 0.1% gain economists had forecast.

The 0.3% gain in November was above the 1% rise to $840.5 billion in October, which were revised lower from a previously reported 0.3% gain.

The latest totals show construction spending rising 0.8% versus spending seen in the same period a year ago.

Spending on residential building were $421 billion, while spending on the single-family homes segment rose 1.6% in November, a healthy gain of 8.4% from year-ago levels.

Spending on commercial building continue to be weak to flat compared to October. Spending on private commercial construction fell 0.1% in November. Industrial complexes, hotels and office building construction make up the commercial building segments.

Public spending rose 1.5% in November to $207.9 billion, which was the most spent in one month since February of last year (2002). The biggest gains were recorded for public housing projects, hospitals and streets. Declines were seen for conservations projects and water supply facilities.

While the construction data saw the major market average lift to there best levels of the session, early bullishness faded as the major market indexes trade marginally lower in a rather quiet trading session.

The Dow Industrials (INDU) 8,594 is off just 13-points and holds the bulk of yesterday's gains, while the broader S&P 500 Index (SPX.X) 906.80 is off just 2 points. Larger-cap technology shows the more volatile NASDAQ-100 Index (NDX.X) off just 3 points at 1,024 in quite trading.

Somewhat related to construction has Dow component and home improvement retailer Home Depot (NYSE:HD) $21.55 -13.38% getting "hammered" to a new 52-week low and triggering a triple-bottom sell signal on it point and figure chart. Current levels match those found back in October of 1998. Armed with a bearish vertical count of $13 after a double-bottom sell signal at $26 in late September, the stock looks bearish and can be shorted/put with a longer-term price target of $13 and a trailing stop at $28.

Home Depot's chief rival Lowes (NYSE:LOW) $36.71 -6.7% also trades lower in sympathy with HD's earning's warning after Bank of America downgraded LOW to "market perform" from "buy" saying the home improvement retailing sector is showing signs of saturation, and the housing market is unlikely to add a new leg to the growth story at this time. BofA also said that Home Depot's warning could hurt other building products names such as Masco (NYSE:MAS) $20.84 -5.10%, Black & Decker (NYSE:BDK) $41.16 -6.9% and Stanley Works (NYSE:SWK) $33.67 -6.62%.

Jeff Bailey

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