Morning Look: More Housing Woes
The market is lower this morning, despite what on the surface looked like a mixed bag of news. The housing data was mixed, financial news was bad, and retailers were mixed.
In housing, mortgage delinquencies reached their highest levels since 1985. January pending home sales were flat, which was above expectations. But if home prices continue to drop, the sector and the consumer will remain under pressure.
Initial jobless claims were 351,000, which was below forecasts, and still below levels that are normally associated with recessions.
Wal-Mart (WMT) and Target (TGT) reported solid same-store sales for February, while many other retailers were mixed.
But the news among the financials was not good, and is weighing on the market. Wamu (WM) had its credit rating downgraded by S&P, and its CreditWatch placed on negative watch. Also, Merrill (MER) was forced to amend some liquid yield option notes. I don't even know what those are, but it highlights the lingering credit crunch.
Tech is actually holding up well, with AAPL, BIDU, GOOG, and RIMM all trading higher. Go figure.
Asian markets were higher across the board overnight. But the Yen is higher again today, which isn't helping. Oil is up slightly, touching $105. And the 10-year yield is lower by 8 basis points to 3.61%.
As for the sentiment indicators, they are once again highly bearish. The CBOE put/call is running at 1.21, a high level. The ISEE is a very depressed 75. And the ARMS Index hit a whopping 2.16, indicating heavy selling pressure.
For the last few days, the high put/call ratios have helped put a floor under the market. But the more times the market probes those lower levels, the more likely they are to eventually give way. I am keeping my eye on the S&P 500 1320 level as my maginot line.
long AAPL, GOOG