Housing Lifts the Dow
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Jonathan Yates
Housing Lifts the Dow

A series of economic reports lifted the market today, with the housing report being the most compelling.  The Dow Jones Industrial Average, NASDAQ, and S&P 500 were all up more than 1% despite the tragedy in Boston, poor growth numbers from China, and continuing threats of a nuclear attack from North Korea.

Housing starts were better than the expected annual pace of 935,000 units. According to the Census Bureau, the pace of new starts reached 1.036 million last month. That rate is the best market since June of 2008, the nadir of The Great Recession.  Permits issued were also bullish at an annual rate of 902,000.  The strongest growth is in multi-family units to cater to those renting.  Of the permits, 392,000 were for multi-family housing, which is very high.

All of the indexes reacted favorably to this news from housing, along with a very favorable interest report.  All of the indexes closed very strongly, a very positive direction to close the day.  The candlestick patterns for each was a surge of elongating, engulfing green bodies until the closing bell.  Even more bullish is that the sentiment is positive going into the after hours session and tomorrow’s trading day.

The exchange traded fund for the Dow Jones Industrial Average (DIA) is now trading above its 20-day, 50-day, and 200-day moving averages.  That is also true for the exchange traded funds for the Standard & Poor’s 500 Index (SPY) and the NASDAQ (QQQ).  Volume for each was about average in today’s market action.

Stocks advancing outnumbered those declining by 75 to 19%, almost 4-to-1.  Also bullish is that almost 70% are trading above the 200-day moving average for each.  A cautionary indicator is that more than half of the stocks are now below the 50-day moving average, not exactly a death cross technical indicator but a mark worthy of note


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