Hold the Phone - WE BEAT EXPECTATIONS!!

The S&P "eclipsed" its 200 day moving average with today's advance. I quote "eclipsed" as that is the word ETrade used this afternoon after the market closed. And the market went up for good reason folks. As Bloomberg reports, the just reported new home sales topped the median economist forecast:

http://noir.bloomberg.com/apps/news?pid=20601109&sid=a2Z1DJWhAV1s&pos=14

Now I have admittedly not read all the details from Bloomberg on what the medium forecast was or how far we beat it but all that matters is that we beat it. UPS and AT&T also just happened to "forecast" increased profits. I am not sure what they know that the rest of us don't but they see rosier times ahead and, hey, the new housing sales beat expectations, so let's party!! (You see what's coming, don't you.)

The better than forecast new home sales for June, while apparently beating the median forecast, is notable for another reason; it was the lowest June new home sales figure ever recorded.

http://www.calculatedriskblog.com/2010/07/new-home-sales-worst-june-on-record.html

So, apparently, economists are getting more pessimistic - much more pessimistic. Indeed, individuals are also not too high on today's market, but as noted in the article first posted above, institutional investors are all giddy with the market. They have significantly increased their equity allocation, which one might suspect is spurring the recent market gains. Thus, I leave you with this, the market went up nicely today and according to Bloomberg it was due to a record low June new home sales number (with a painfully significant downward revision to the May numbers) and some companies providing optimistic profit forecasts. Warm and fuzzy, ain't it.

P.S. I just checked and Bloomberg is now attributing the better than expected new home sales numbers in the U.S. for Asian markets rising. Let me repeat, the June new home sales number was the lowest June new home sales number on record, which follows a record low May number after it was significantly revised lower. Now the linked article below suggests that it was the percentage increase from May that was unexpected, but that is largely due to the significant revision lower in May numbers that just took place. I feel like a robot in a B movie saying "This does not compute . . . this does not compute."

http://noir.bloomberg.com/apps/news?pid=20601087&sid=axeDbxWBhbkA&pos=2

And by the way, it will take a few months before price indices show it, but apparently housing prices have gone down a good bit after the expiration of the tax credit. Apparently people are unwilling to pay any more and are expecting the sellers to provide the $8000 credit now.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=axeDbxWBhbkA&pos=2

Yep, time to pop the cork.

Disclosures: None.