Case Shiller March 2012 Up, Stocks Rally As Dollar Stays Strong:
Home prices may be stabilizing according to new data from the Standard & Poor’s/Case Shiller survey released today that showed a gain for the first time in seven months. Average home prices increased in March 2012 from February and this data confirms recent reports that showed the housing sector is modestly improving. Last week, the NAR said median home prices rose 10 percent from 2011 and the Commerce Department said Wednesday that April 2012 new-home sales increased 3.3 percent to a seasonally adjusted annual rate of 343,000.
Most of the 20 cities in a Standard & Poor’s/Case Shiller survey saw an increase in home prices although year over year the increase was 2.5 percent lower and is down roughly 35 percent from the 2006 highs.
Is U.S. Economic Data Gaining In Importance?
We aren’t confident that U.S. economic data is outweighing fears from the European debt crisis that remain a focal point for traders. The positive housing news didn’t outweigh fears of further problems abroad and the possible contagion effects from a faltering eurozone. News about bank shares plunging abroad was shunned by traders today and if this continues we believe negative sentiment may have peaked if investors become calloused to European headlines. We don’t feel this has occurred yet but volatility dropped significantly today after the long holiday for Memorial Day filled with negative headlines from Europe and this allowed investors to stay in long positions.
The dollar is still very important for monitoring global sentiment for U.S. equities. The UUP hit a new one-year high but closed relatively flat today, coupled with lower volatility it gave traders a reason to be bullish.
The Dow was up 125.86 to 12,580.60 finishing the day higher by 1.01 percent. The NASDAQ was up 33.46 points to 2870.99 up 1.18 percent while the S&P closed up 1.11 percent to 1332.42 rising 14.60 points. We believe a defensive posture is still warranted until major averages breakout of the current range created last week.