And yet again...another up day

Unexciting day. The market opened unchanged and turned into positive territory within the 1st hour. From there we stayed in the positive until we had 30 minutes left on the clock. A late day bout of selling forced the market lower and erased all of the prior gains. The Dow closed with a minus of 29 points. The S&P closed -1.58 points (minus 0.34 % and -0.17 % respectively).

Today's price action was a typical consolidation after yesterdays huge advance. The market was range bound but still managed to add onto yesterdays positive close.

The only economic report today was the housing starts for April. The number came in at 458 thsd on an annualized basis, down a whopping 12.8 % versus the march number. More problematic is the actual magnitude of the decline as compared to last year. In April 2008 starts were showing a number of 1 Mio (1,001,00 to be exact).

As such the April 2009 number represents a whooping 54.2 % decline in housing starts on an annual basis.

As bad as the number is...here is the good news about it. Starts are running now well below expected demand which is needed to shrink the inventory of new homes available for sale. Furthermore...the construction of single family homes was actually almost unchanged...(-2.4 % versus March).

Admittedly...reading something good out of the number is like finding happiness in the eye of a hurricane. At least though it looks like the worst might be over in the single family home market. The next couple of month will bring some clarity on that subject but for the time being we at least know that the meltdown in new construction seemed to have stopped .

Today's price action was rather "uneventful". If anything it is the market's inability to hold onto gains which suggests that we see some weakness tomorrow.

Regardless though..any weakness will have to be seen in the context of the gains from yesterday. Only if we would brake the lows from Monday a true reversal in short term trends is evident.

Until that happens I remain neutral stocks. As I have said before...I do have a negative short term bias but thus far the market has proven me wrong.

Let's see what happens tomorrow.

Cheers

Steve Benger