Reversal Day....

It was a mixed day. The market opened stronger but quickly reversed to the downside. The major indices stayed solidly in the red throughout the day before the final hour yet again produced a rally which lifted us from the bottom . The one exception to today's negative day was the Dow...it actually managed to stay positive most of the day and finally closed + 50.42 points or + 0.60 %.

The S&P on the other hand, as a barometer of the overall market was down marginally, - 0.09 %.

On the economic front it was actually rather busy.

The National Association of Realtors reported that the national average median home price fell to $ 169,000 for the first quarter, a decline of 13.8 % year over year. Perhaps more telling was the decline from the 4th quarter 2008 to the 1st quarter 2009. Prices fell by an astonishing 6.2 % quarter over quarter. To make matters worse...sales volumes (number of homes sold for the quarter) fell yet again...down 3.2 % for the quarter.

The other number reported was the March trade deficit. The deficit widened slightly from 26.1 Billion to 27.6 Billion for March. No big surprise here...analysts had on average expected an even bigger number (29 billion), as such the smaller than expected number represents some good news. However...imports as well as exports continued to decline (imports were down again...-1 % in March)

Is is tough to look at those numbers and identify major positive items. Home values continue to erode and the decline even seems to accelerate. Consumption is also affected...as is shown by the declines in imports. Continued losses in home values will almost certainly curb the enthusiasm of the US consumer to spend money in the future.

Today's market action was non directional. Even though the overall market was actually down a bit the Dow managed to post a positive close. It seems to me now that the market has become non directional. There is clearly a lack of conviction to press stocks either way and unless we brake decisively away from current prices I remain neutral.

Aggressive type of investors can hold onto their put options. Option expiration is coming up on Friday and I assume that prices will remain somewhat range bound till then.

See you all tomorrow,

Steve Benger