So far, the 1,300 level of the S&P; 500 has been a formidable opponent for the bullish crowd, as the markets sold off yesterday after coming within striking distance of breaking through that milestone.
Despite the positive earnings from IBM and Apple on Tuesday, it was a reversal on Wednesday as the financials and technology shares were a drag on the markets.
Housing starts in 2010 were absolutely atrocious and came in as the second lowest number since record keeping started in 1959. It just simply is a confirmation that housing is still in the doldrums and will not improve until prices will have found a level that not only creates genuine demand but also is in line with median incomes for any given area. You can stimulate all you want but nothing permanent will come from it until these two conditions are met.
Oh yes, and it would help to have a major improvement in the employment picture; after all, most home owners make their home purchases with monies received from earned income.
Talk has increased that the markets have become increasingly ripe for a pullback. While yesterday’s 1% retraction in the S&P; was fairly mild, it pays to be prepared should this turn into more than just a temporary bearish phase.
While the major domestic and international trends remain up, there is always the possibility of more short term reversals. There is nothing to do at this point except knowing where your potential exit points should be.