Housing on fire! Hold tight wait till the party’s over, hold tight were in for nasty weather, there has got to be a way! Burning down the house! Or should I say the housing numbers were on fire! Forget all of that talk of unemployment at a 26 year high and 50,000 Americans filing for unemployment last week. And forget about the pathetic demand for oil because at least someone thinks this old economy has some gas in the tank. I won’t bother talking about what doesn’t matter to the market because what does matter, at least for now, is the hope of economic recovery.
A blowout housing number blew out my shorts and blew away conventional wisdom when the market went wild over existing home sales that rose by a much better than expected 3.6 percent! The National Association of Realtors said sales came in at 4.89 million, above the 4.84 million analysts had been expecting!!! WOW!!! Party!!! Don’t sweat the details like the fact that foreclosures and short sales reflected 31% of sales in June. Or that the average price for an existing home last month was $181,800, a 15.4% decrease from June 2008. Or that none of this really cuts into near term over supply of everything petroleum. When economic optimism is on full thrusters it is powerful enough to drag the oil out of the muck.
Oil rose because the Dow hit 9000 for the first time since January and the highest close since November. Oil has ignored bearish supply and demand fundamentals as the fundamentals of expectations of an improving economy seem to be a bit more exciting as the Dow has risen 923 points, or 11 percent, in just nine days. Forget about that pesky supply and demand stuff for the moment because the market just does not care. It cares more about the Dow and rising economic expectations.
Of course when you live by rising expectations you can die by them as well. You can lose if those expectations are met or be disappointed when they are met and do not exceed your expectations. We still feel that despite this upside breakout that after this pop, oil will fall hard. It may just be a little bit longer until we get back to earth in our dreams of recovery!
Happy Friday! Sign up for my daily energy blast and call me for the latest updates. Just call me at 800-935-6487 or email me at pflynn@alaron.com to open your account. Also check me out every day on the Fox Business Network.
Stopped on short September crude from apprx 6660 at apprx 6760.
Stopped on short September RBOB from apprx 18000 at apprx 18500.
Stopped on short September heating oil from apprx 17450 at apprx 17650.
We're short September natural gas from apprx 390 - stop 430.
