The U.S. markets are seeing a very minor oversold bounce after last week's plunge. The political saber rattling over Ben Bernanke's confirmation has cooled and it looks like the Fed chairman will be reconfirmed. U.S. existing home sales for December were a big disappointment and creates doubt over the strength of the recovery. The dollar is flat, which is giving commodities a chance to bounce from last week's decline.
Foreign markets were down across the board. The Japanese NIKKEI index lost 0.74% as a stronger yen weighed on exporters. The Hong Kong Hang Seng posted its fourth loss in a row with a 0.6% drop. The Chinese Shanghai index gave up another 1%. In Europe stocks posted their fourth loss in a row. Miners, energy, and drug stocks led the decline. The French CAC-40 fell 1%. The German DAX dropped 1.1%. The English FTSE gave up 1.4%.
Here at home Ben Bernanke's confirmation remains a big story. Last week part of the turmoil was caused by political rhetoric suggesting Ben would not get reconfirmed. The deadline to confirm him is this coming Sunday so naturally the markets were nervous, especially with no clear replacement. It looks like cooler heads are prevailing and it appears that odds are growing Bernanke will remain Fed chairman. Speaking of the Fed the FOMC begins a two-day meeting tomorrow. No one expects them to change their stance on interest rates with their announcement on Wednesday.
Existing home sales in the U.S. is another big topic. December's existing sales plunged 16.7%, the worst monthly decline in history (or at least back to 1968). The sudden slow down casts a big shadow over the strength and future of the recovery in this country. Hopefully our readers are not surprised by this decline in sales. I've been warning that the rush to buy houses before the original new homebuyer tax credit deadline in November would create a vacuum of sales over the winter. The National Association of Realtors said December's sales pace fell to 5.45 million (-16.7%) while economists were only expecting a -10% pull back. The median price of a home in the U.S. in December rose to $178,300, which is up 1.5% from a year ago. Overall the median price of a home for all of 2009 was $173,500, which represents s 12% drop from 2008 and one of the worst years for housing since the Great Depression.
In corporate news Wal-mart (WMT) announced they were cutting over 11,000 jobs from their Sam's Club division. Most of the positions are part-time workers and the Sam's Club CEO said it shouldn't have an impact on results. Later tonight after the closing bell Apple Inc. (AAPL) will report earnings. Wall Street expects a profit of $2.07 a share. Normally I would expect a big move out of AAPL, either direction, following their report but I wonder if shares will churn sideways as investors wait for their new product unveiling on Wednesday.
Currently the S&P 500 index is up 0.7% with a bounce back toward the 1100 level. The NASDAQ Composite is bouncing from a test of the 2200 level. The Dow Industrials are up 0.59% with a bounce near the rising 100-dma. The Russell 2000 is up 0.2% as it tries to bounce from the rising 50-dma. Crude oil is up about 60 cents near $75 a barrel. Gold futures are up $7 near $1,097 an ounce.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
We're not seeing a lot of movement in the OptionInvestor.com play list but there has been some action today. Our aggressive buy the dip play in JOYG has been stopped out as shares break support. FDX hit our breakdown trigger to buy puts under $80.00.