New Home Sales up, Breakout from high, strong momentum upwards --> LONG --> $720 profits.
5 min Nasdaq Emini 100
Hi,
Today there's an important piece of market info that all traders should take note of : New home sales at 10:00. This will greatly affect the direction for the rest of the day...
At 10:00 am, annoucement was made that new homes rose sales 2.8% and market was reacting good to it.. But I didn't believe the rally ... I had to wait for some confirmation... At 11:50, finally, price broke out above the high established by the morning and momentum seems strong. Stochastics was constantly in the overbought region suggesting strong buying pressures. I longed 1 contract at 1946 and another 2 more contracts at 1952 when price paused for a while... Today seemed like a bull trend day and I didn't want to exit prematurely as long as I am still in the green.. The trade was in the green since I entered and I held it all the way till 1962 where a red candlestick appeared and stochastics started to turn sharply down... for profits of $720.
Fundamentals:
New-home sales turned up and factory orders soared in July, suggesting the economy was on stable footing before a credit crunch took a turn for the worse.
The Commerce Department reported Friday that sales of new homes rose 2.8 percent to a seasonally adjusted annual rate of 870,000 units. The increase came after a 4 percent drop in June.
Another report from the department showed that orders placed with factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.
The latest batch of economic news was better than analysts had expected. They were forecasting home sales to fall and calling for a much smaller, 1 percent gain in factory orders.
On Wall Street, the reports cheered investors who have been consumed by worry in recent weeks about the country's financial health amid spreading credit troubles. The Dow Jones industrials vaulted 142.99 points to close at 13,378.87.
The housing report showing the July sales boost comes as credit standards have been tightening on home mortgages. Credit problems took a turn for the worse in August, making it even harder for some buyers to get financing. That means home sales in the coming months will likely show renewed weakness, economists said.