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IBDvalueinvestin (99.68)

Market should Go back to GREEN by end of day.

Recs

2

June 16, 2009 – Comments (11)

because the Markets focusing on wrong data in the early going today:

Markets are falling on Industrial production numbers not being as high as expected. But keep in mind Industrial production in the USA is now only 10% of the Economy.

The USA is a majority services economy now. 

The better indicator today is the housing numbers which is giving a big indication that housing has bottomed.

The Commerce Department said home construction jumped in May by the largest amount in three months. Construction of new homes and apartments jumped 17.2 percent last month to an annual rate of 532,000 units, better than the 500,000 economists had expected. Construction had fallen in April to a record low of 454,000.

Applications for building permits, an indicator of future construction activity, rose 4 percent.

Separately, the Labor Department said wholesale prices rose less than expected in May as a large jump in gasoline prices offset a drop in food costs. The Producer Price Index increased by 0.2 percent from April, below the 0.6 percent expected by analysts.

Not all the news was upbeat. The Federal Reserve said industrial production fell a larger-than-expected 1.1 percent in May as the recession hurt demand for manufactured goods including cars, machinery and household appliances.

"All in all I'm encouraged," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

 

11 Comments – Post Your Own

#1) On June 16, 2009 at 12:48 PM, IBDvalueinvestin (99.68) wrote:

Some stocks still rallying today:

STEC, HIG , CHNG, MTL, LDK, ATNI, CALM,

LVS +9%, WYNN +6.4%, MGM +6.4%, ASCA +3.7%, BYD +3.5%, SHFL +2.8%, PENN +2.6%, WMS +1.4%. 

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#2) On June 16, 2009 at 12:57 PM, Entrepreneur58 (37.68) wrote:

Watch mortgage rates to know where the housing market is going.  Housing goes the opposite direction from rates.

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#3) On June 16, 2009 at 1:11 PM, russiangambit (29.31) wrote:

> Industrial production in the USA is now only 10% of the Economy.

Yes, and consumer is another 70% and consumer got no money.

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#4) On June 16, 2009 at 1:21 PM, Evlampius (< 20) wrote:

is "Should" the key word in here?

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#5) On June 16, 2009 at 1:23 PM, jstegma (29.27) wrote:

Housing has not bottomed.  That is an easy one.

Sell.

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#6) On June 16, 2009 at 1:30 PM, MikeBobulinski (< 20) wrote:

I'm not 100%, but it certainly looks like the market is driving deeper into the RED.  Would love to see it go GREEN again, but am thinking today is a lemming kind of day...someone yelled "To the RED sea," and everyone has decided to run along and follow.  What's driving this?  Perhaps you are correct, "wrong data", but knowing this does not change the fact that the market has a herd mentality.  Right now the herd is spooked and following the lemmings to the sea.

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#7) On June 16, 2009 at 1:31 PM, IBDvalueinvestin (99.68) wrote:

13 days to go for "Russell Reconstitution"

Some stocks are falling because they will be dropped from the indexes following them while others are rallying because they will be added to an index :

Russell Reconstitution
Annual rebalancing of Russell Indexes


In order to maintain indexes that are truly representative of global equity markets, Russell annually rebalances the entire family of indexes in June.

2009 Reconstitution
Reconstitution will be finalized on June 26, 2009.

Frequently asked questions

Reconstitution schedule

  May 29 Market capitalization ranking date June 12 Preliminary additions and deletions to the Russell Global Index, Russell 3000® and Russell Microcap® published June 19 Updates to the list of additions and deletions June 26 Updates to the list of additions and deletions
Reconstitution final after the close of the U.S. markets June 29 Final membership lists posted for the Russell Global, Russell 3000, Russell 1000®, Russell 2000®, Russell Midcap® and Russell Microcap indexes

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#8) On June 16, 2009 at 1:43 PM, IBDvalueinvestin (99.68) wrote:

The Russell indexes of 2009 will have stocks added to the their indexes with far better fundamentals than those of 2008.

Why? Because stocks that will be added in 2009 were not able to be added in 2008 because their market caps were too high to be added.

But the market crash has changed all that, the market caps are  lower for just about all stocks even those with great fundamentals at this time compared to the over-inflated prices of stocks in 2008. 

So we are going to be seeing alot of stocks in the Russell indexes with great fundamentals in 2009, far better than the ones that will be dropped off the indexes.

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#9) On June 16, 2009 at 1:44 PM, bigcat1969 (92.33) wrote:

Thanks for that info on the Russell Reconstitution and the link that is interesting information.  I think you are wrong about going green, but I've been wrong several times in my life and today for that matter.

http://www.calculatedriskblog.com/2009/06/housing-starts-may.html   might or might not change yourthoughts on housing, but it seems more balanced than some reports I've seen.

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#10) On June 16, 2009 at 1:44 PM, GenericMike (< 20) wrote:

The market went up for months while focusing on the wrong data. I don't see why it can't continue to go down focusing on the "wrong" data.

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#11) On June 16, 2009 at 1:59 PM, tonylogan1 (28.15) wrote:

good post on the Russell rebalance... but I think you are off on this one...

Housing construction picking up means nothing!!! It is already at very low levels, and the more houses they build, the more inventory is out there, which just drives down prices (good for me, bad for existing mortgage owners)

Also, the market does not always respond to news of the day... It may be reacting today to expectations of news to be released tomorrow.

Or maybe it is reacting to being way to freaking high already.

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