The Tycoon Report

End Result Still The Same

After spending a lifetime rooting for the underdog I should have been mentally prepared for the market to close lower again yesterday, but hope got away from me and it looked like the major indices were going to eke out gains. They didn't happen, alas. All things considered, however, the market put up a good fight and actually had a better outing than suggested by the indices. The last hour of trading has become so intriguing, like a tempest in a teapot, the whirlwinds take stocks all over the place, but they always finish lower. If you're looking for a buy signal (maybe the ultimate buy signal) it has to be the session that opens under news/event-driven pressure, slams the Dow by more than 100- points, and climbs back to finish up 100-points.

Right now I'd take the Dow up a single point as long as it proves it could climb off the canvass after a tepid start. Beneath the surface yesterday's session was different than all the other down days this year as there was a fair amount of buying, the kind one would call bottom fishing. Advancers and decliners were just about even on the New York Stock Exchange, and advancers actually beat out decliners on the NASDAQ. Unfortunately, big names pressured the NASDAQ, which spent the majority of the session underwater. Finding any advancer on Tuesday was harder than the proverbial needle in a haystack. Yesterday's session felt like an avalanche of advancers. New high and new low numbers continued to be horrific, and even 36 new highs on the NYSE seems unbelievable.

In the grand scheme of things yesterday's session probably won't have any distinction for the broad market, but we saw a couple of financial stocks move higher even after posting apocalyptic news. Shorts are in the catbird seat and have been able to take profits without affecting a shift in overall market bias. Yet, some of the buying I watched yesterday didn't look like traders, but instead might have been long-term money. The thing about the market is the mental angst that presents a far greater challenge than a slower economy.

Fed Beige Book

Stocks got a boost after the so-called Fed Beige Book was released. In effect, the report underscored the obvious and the need for a sense of urgency. Through anecdotal information the Fed Beige Book measures twelve "districts" to assess the health of local economies.

Economic Data

Today, new home permits and starts data for December came in, and they were each lower than last month, which at this point is no surprise. Housing starts were lower than the consensus estimate by approximately 130,000 at 1.006 million units. This is 14.2% fewer starts than last month. Shares of homebuilders actually improved a bit after the data came out but are still indicating to open lower. Investors appear to be taking the news somewhat positively since fewer starts means builders won't be adding as much inventory to the market, which is already drowning in excess supply.

Initial jobless claims declined 21,000 last week to 301,000, better than the consensus estimate of 331,000. The four-week average of new claims fell by 11,750 to 328,500, which was the lowest level since late October. Although the weekly numbers are typically volatile this time of year, this recent reading was an encouraging tidbit to the U.S. jobs market story.

Written by Charles Payne, CEO and Principal Analyst of Wall Street Strategies (www.wstreet.com) providing information to over 30,000 subscribers, in more than 60 countries as well as several of the largest bank/brokerage firms.