Five Things You Need to Know: Where Do We Stand?; GDp revised lower; New Homes Still For Sale; Juvenile Delinquent!; EXTRA EXTREME SPORTS!
What you need to know (and what it means)!
Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. Where Do We Stand?
OK, so what's the technical damage as we dig through the carnage this morning?
- Below are some indicators and various support levels to give you a map of where we are heading into what should be an important session.
- Important point and figure bullish percent levels:
- S&P 500 Bullish Percent: Currently in Xs marked to 80%, but down 3.6% yesterday and now at the 76.4% level; 2.6% net new sell signals away from reversing down to Os.
- NYSE Bullish Percent: Currently in Xs marked to 74%, but down a huge 4.15% yesterday to the 71.05% level; now 3.05% away from a reversal down to Os.
- Nasdaq 100 Bullish Percent: Reversed down to Os yesterday. Supply now in control of Nasdaq 100.
- Nasdaq Composite Bullish Percent: Currently in Xs marked to the 62% level, but down 2.3% yesterday; now 1.74% away from a reversal to Os.
- Here are important support/resistance levels to watch in the broad indices based on daily charts:
- SPX: 1364/1430
- DJIA: 11,855/12,500
- NDX: 1732/1780
- RUT: 778/804
- The support levels above, 1364, 11,855, 1732, 778, are based on the DeMark TDST indicator, which helps evaluate important trend continuation or reversal probabilities.
- These will be important to watch over the next seven trading days if we begin to near buy setups on the daily charts.
- A break of these levels would suggest the selling pressure is powerful and, combined with potential reversals in key bullish percent indicators, point to a critical regime change in the markets.
2. GDp revised lower
Hey, what happened to our p, man? Did anyone else notice that Gross Domestic Product was revised sharply lower this morning?
- Remember that unexpectedly strong GDP release back on January 31?
- Remember when it came in at a "robust" 3.5% pace for the fourth quarter, far exceeding economists' expectations?
- Well, that was wrong.
- This morning the Bureau of Economic Analysis revised it down to 2.2%, which was where most economists expected it to be.
- Why the revision?
- According to the BEA, the sharp downward turn was due to reduced inventory investment from companies, with capital expenditures taken down to -3.2% from -1.8%, and slowing (though still positive) consumer spending.
- So, what does this mean going forward?
- When we factor in yesterday's Durable Goods Orders release we can begin to consider what a slowing economy really looks like.
- Take a look at core shipments of Capital Goods:
- The decline of 2.7% month-over-month follows December's decline of 0.8%.
- The core shipments number in the Durable Goods report can give us at least some baseline for the current quarter GDP, since orders themselves are more forward looking.
- Perhaps this is why Fed Funds Futures are now pricing in a better than 60% chance of a rate cut by August.
3. New Homes Still For Sale
The Commerce Department just reported that New Home Sales fell 16.6% in January.
- That adds up to the sharpest monthly decline in 13 years.
- According to Reuters you have to go back to 1994 when there was a 23.8% decline in new home sales to find a worse number.
- We can now add more than a month to the supply of new homes on the market based on this sales pace, from 5.7 months' of supply in December to 6.8 months now.
- Of course, existing homes represent a far larger portion of the market - more than three quarters - and yesterday Existing Homes Sales came in above expectations, rising 3%, the biggest jump in about two years, according to the National Association of Realtors.
Existing Home Sales
- "How'd they do it?" you might reasonably ask.
- Simple. They cut prices.
- The national median price for all homes fell more than 3% year-on-year in January.
4. Juvenile Delinquent!
The Federal Reserve yesterday quietly noted that delinquency rates on banks' residential real estate loans have reached a four-year high.
- The portion of loans on which payments were at least 30 days overdue rose to 2.11%, the highest since the fourth quarter of 2002, and a jump from 1.72% the previous three months.
- The Fed insists that most mortgage repayment problems are contained within the subprime segment, which is small relative to the overall pool of mortgages.
- Previously, the Mortgage Bankers Association said subprime delinquencies rose to 12.6% in the third quarter, up from 11.7% the previous three months.
- Since August at least 20 subprime lenders have either gone belly-up, sold themselves, or scaled back their lending, according to Bloomberg.
- This all ties in with yesterday's note on No Worries for banks and their paltry reserves.
5. EXTRA EXTREME SPORTS!
There's been a lot of talk over the past 24 hours about risk aversion versus risk-seeking behavior, mostly related to the stock market. But what about other manifestations of risk-seeking behavior outside of the stock market?
- If it's true that the stock market is the world's largest psychological barometer, then we shouldn't be surprised by the latest wrinkle in the world of extreme sports.
- Underwater Ice Hockey.
- That's right. It's ice hockey. Played underwater. Without oxygen.
- According to Annanova News, the first ever World Cup in the new extreme sport of underwater ice hockey was played by eight nations in Austria.
- The "no oxygen rule" meant players had to resurface for air via a number of holes that had been specially drilled in the ice.
- This caused us to wonder what other extra extreme sports are possibly on the horizon.
- Below are some of the sports we would stage in the Minyanville Extra Extreme Sports Challenge.
Minyanville Extra Extreme Sports Challenge
1. Volley Medicine Ball
This unique extra extreme sport is just a good, old-fashioned volleyball match... but played with a 15 lb. medicine ball. Beware of the concussive spike!
2. Nitroglycerin Pool
Do you like to play pool for money, Fast Eddie? Then raise the stakes with Minyanville's Nitroglycerin Pool. One of the pool balls has been hollowed out and filled with unstable, explosive nitroglycerin liquid. Do you dare try that risky bank shot?
3. Kentucky Extreme Derby
If the Kentucky Derby is the "most exciting two minutes in sports," then the Kentucky Extreme Derby is the most exciting two minutes in Extra Extreme Sports. Unlike wimpy jockeys in a boring, old-fashioned regular horse race who simply ride a horse around the track, the Kentucky Extreme Derby features manly jockeys willing to be dragged for a mile and a quarter by a lightning fast thoroughbred race horse, all the while hoping to avoid being stomped by a rival's horse. Go baby go? Try, oh baby no!
And they're off... literally.
4. Kickboxer Skydiving
Two kickboxers. One parachute. You do the math.
Apparently, we have a winner.
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