The news today was
•"Manufacturing Index Expands for First Time in 18 Months"
•Pending home sales rise to 2 year high
•Manufacturing sector shows growth as ISM index at 52.9
•Ford Motor's US Auto sales leaped 21.5% in August
The Not So Good...
•Construction spending down in July
The market opened down this morning which is a bullish sign after a down day, based on past patterns. For the short seller, he wants to see a pop up on the day following a down day. I forgot the psychology behind the pattern, but I know the pattern! The market opened down and immediately turned upward. It was moving pretty strong and had very strong bullish pattern going. After the above news came out at 10am EST, the market make a quick move down, then recovered, and then tanked! The first sector to go red was financial and then the rest of market went with them.
I think today's action is the market fooled everybody. Great numbers, good recovery this morning and more evidence the economy is getting better is the reason a lot of investors bought stocks today. Besides over the past 4 to 6 months, the rule has been buy on the dips. However, it looks like 'the music may have stopped playing'.
The pending home sales number is very suspect considering the government is giving people $8,000 to go buy houses. The number from Ford came out about 2 hours later which coincided with the next big move down. It was a great number. Auto sales up 21.5%! But wait, then again the government has given consumers money to run out and buy cars. This will take away from future growth. After the government stops handing out money to buy houses and cars, what do you think the next numbers will look like. They will go down again.