Early Selling—Late Rebound

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Even poor economic reports were not able to keep this market subdued for any lengthy period yesterday.

A drop in the Consumer Confidence Index clearly confirms that job security, or insecurity, still contributes to a lack of spending causing this indicator to drop from 54.3 in November to 52.5 in December.

Suspicions that the housing market is still in a major struggle were confirmed by the Case-Shiller 20-city home price index, which fell 1% in October. It was its third monthly decline in a row. Year over year the index is down 0.8%.

To my way of thinking, a bottom in real estate is not even in sight yet since many areas are still priced in bubble territory. The only way we will find a true bottom in this market is when the median income in any given area supports the median price of a home. Anything else is nothing but wishful thinking.

Gold, energy and commodities had their day in the spotlight. Especially gold reacted strongly to the upside as a weak auction of 5-year Treasury notes pushed interest rates higher.

In the end, the markets inched higher again—on fairly poor news. It makes me wonder if the cause was simply low volume or whether all of Wall Street’s optimists are manning the trading computers while the pessimists are still on extended Holiday vacation.

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