Oil Rises As Market Rebounds On U.S. Housing Data, EU Summit June 2012 No News:
U.S. stocks rebounded from recent lows as short-term bullishness dominated market sentiment today based on technical indicators suggesting oversold conditions. The June EU Summit 2012 yielded no new major outcomes and investors bought stocks based on some positive U.S. housing data.
May 2012 pending home sales were up 13.3 percent from last year and rose to nearly the highest level in two years. Pending home sales were up by 5.9% from April the National Association of Realtors said today. We believe this is a secondary indicator as jobs and income growth have been stagnant. A significant amount of home sales are being generated by investors and those with cash as credit seems to be difficult for individuals seeking to finance with an 8.2 percent national unemployment level.
Oil rose today to make up for some of the losses from the last 3 months. We are looking at the financials, tech and small caps first because oil has slightly decoupled from the overall market recently. Our current benchmark indicators rose today on the positive housing economic data but we still believe a defensive posture is necessary while short term bullishness helps stocks rebound from recent lows. Sell in May and go away isn’t working right now.
A graph of oil versus the S&P 500 clearly shows oil is falling faster than the overall market in the last 3 months and should be monitored after looking at market related benchmark sectors.