As I thought yesterday the housing numbers were quite bad posting 3.83M versus an expectation of 4.650 existing home sales. While the prices initially gaped down and pierced through major supports, an unexpected rally took hold upon release of the above news. Perhaps it’s an attempt at a short squeeze or bottom picking bulls, but I’m not expecting it to break the trend. After all market fundamentals are quite bad, and the news headlines will begin to make the rounds which should start a new wave of selling from the late comers. However as we know nothing is certain so it’s important to be ready in case of the opposite scenario. We have a few strong supports still to go through, now $SPX 1050 is an important one which is close to DOW 10,000. If it breaks through that we should be able to see the $SPX 1040 area that I called last week.
Morning update 8/24