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Will Housing and Autos Confirm Weather-Related Recovery?

  • Written by Syndicated Publisher No Comments Comments
    March 25, 2014

    The U.S. stock market remains in its volatile but going-nowhere sideways move since December.

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    As noted in my weekend column ‘The U.S Market is Swimming Against an Ominous Global Tide’, it remains resilient in spite of the downside pressure of weak global economies and markets.

    Part of that resilience is no doubt due to expectations that the economic slowdown in the U.S. through the winter was due to the unusual weather, and not to longer-term problems in its economy. Recent positive reports related to manufacturing, retail sales, and jobs have been supportive of that expectation.

    However, we have yet to see confirmation from the main driving forces of the economy (in both directions), the housing and auto industries.

    From the housing industry, existing home sales have been in trouble since July, which cannot be blamed on weather. Latest reports showed they were down 5.1% in January, and another 0.4% in February, which was no doubt weather-related.

    But will better weather reverse the eight-month downtrend?

    United States Existing Home Sales

    Meanwhile, as dismal as existing home sales have been, new home sales spiked back up dramatically (9.6%) in January after a three month decline, defying forecasts of a further weather-related decline.

    United States New Home Sales

    Like existing home sales, new home sales had also plunged in July. But they began to recover, and surged up into October.

    They then declined for three straight months during the winter, only to spike back up in January.

    It was interesting that the January numbers saw the biggest gains in the weather-hammered Northeast (+73.7%), while sales in the Midwest plunged 17%.

    That does make the numbers suspect, and adds to the importance of next week’s new homes sales report for February.

    Meanwhile, auto sales were down during the winter months in spite of the use of large rebates and low interest rate enticements not seen since the auto industry collapse in 2008-2009.

    United States Total Vehicle Sales

    But forecasts are for recovery in March. Auto sales for March will be reported a week from Monday (April 1).

    So we will soon know whether housing and autos will confirm that the economic slowdown in the U.S. through the winter was due to the unusual weather, and not to longer-term problems in its economy.

    Are beaten down markets ready to rally?

    Some of the beaten down global markets had significant bounces this week.

    As shown in the global markets table below, two of the biggest bounces were in Brazil (5.4%) and Mexico (5.5%).

    But the impressive moves only carried them back to the potential resistance at their 50-day moving averages. However, they do deserve watching.

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    Germany also had an impressive bounce (3.2%), but remained beneath its 50-day m.a.

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    To read my weekend newspaper column click here:  The U.S Market is Swimming Against an Ominous Global Tide

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

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