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Homebuilders Rally After Strong Earnings Report

by In The Money | February 2, 2010, 9:58 am

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The market is getting a nice lift in early trading, after opening relatively flat. Homebuilders are the leading sector so far after strong earnings reported by DR Horton (DHI) and an in-line pending home sales (+1.0%) report.

There were several other solid earnings reports this morning, and some of the stocks are getting nice bounces out of it: Emerson (EMR), Ann Taylor (ANN), and Whirlpool (WHR). Overall, corporate profits have been solid this quarter, but they have not been the catalyst for stock prices that many had hoped.

The dollar is lower today, which is boosting commodity prices. Oil is higher to $75.75 and gold has rallied back to the $1115 level. Nonetheless, the materials sector (XLB) is lagging. Industrials (XLI) are the leading sector this morning (+0.95%), followed by tech (+0.94%).

Asian markets rose overnight, led by Australia (+1.8%) after its central bank surprised markets and held their benchmark interest rate steady at 3.75%. China continued to struggle after ICBC reported new loans in January were lower vs. year-ago levels.

The 10-year yield is lower to 3.64%, and the VIX is another -3.4% lower to 21.83.

Later today, Paul Volker will testify on proposed banking regulations. He will say that proprietary trading and speculative activities at commercial banks should not be protected by the government and that restrictions should be placed on those activities. This information is well know, but I would not be surprised to see the market weaken when his testimony is televised.

Trading comment: The market is getting that oversold lift we talked about, and approaching the SPX 1100 level. This is more just a psychological level, while 1110-1120 will act as more significant resistance, if and when.

I have made a few small trades, but nothing big. I would look to raise a little cash on a further lift in the market to be in better shape for another pullback.

long EWA, GLD

	About In The Money inthemoneystocks.com
InTheMoneyStocks.Com is a research and consulting company focused on mathematical proprietary techniques along with a key understanding of price, pattern and time. Through understanding geometry and other technical analysis methods, InTheMoneyStocks.Com prides itself on avoiding Wall Street hype while calling major and minor moves in the DOW, NASDAQ and S&P, commodities, currencies and stocks. Recent Articles: Jobs Report Stronger Than Expected - Sep 3, 2010 Solid Retail Sales, Pending Home Sales Boost Sto... - Sep 2, 2010 Market Soars On Strong PMI Data - Sep 1, 2010 S&P Tests 1040 Level Again - Aug 31, 2010 Market Shrugs Off Lowered Guidance From Intel - Aug 27, 2010 Investor Sentiment Reaching Bearish Extremes Aga... - Aug 26, 2010

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	Random Market Definition
Dow The most widely used indicator of the overall condition of the stock market, a price~weighted average of 30 actively traded blue chip stocks, primarily industrials. The 30 stocks are chosen by the editors of the Wall Street Journal (which is published by Dow Jones & Company), a practice that dates back to the beginning of the century. The Dow was officially started by Charles Dow in 1896, at which time it consisted of only 11 stocks. The Dow is computed using a price~weighted indexing system, rather than the more common market cap~weighted indexing system. Simply put, the editors at WSJ add up the prices of all the stocks and then divide by the number of stocks in the index. (In actuality, the divisor is much higher today in order to account for stock splits that have occurred in the past). also called Dow Jones Industrial Average (DJIA).

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