Hello traders everywhere! Jeremy Lutz here, with your mid-day market update for Wednesday, the 27th of February.
THE HOUSING MARKET CONTINUES TO SHINE
After yesterday's news that new home sales rose nearly 16 percent in January, The National Association of Realtors (NAR) showed a much bigger than expected increase in its pending home sales index today, which reached its highest level since April of 2010 in January. NAR said its pending home sales index rose by 4.5 percent to 105.9 in January after falling by 1.9 percent to 101.3 in December. Economists had expected the index to increase by 3.0 percent.
What is a pending home sale? A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
We are looking for gold to have long-term key support between $1500 and $1550. The market action in 2013 is similar to 2008, which was for the most part a defensive year. For most of February, we have seen heavy liquidation, and that liquidation for the most part is over. In the short-term, we are expecting to see more of a two-way market in the months ahead. At the moment, gold is in a negative trend, however the longer-term trend for the past decade has been been up for gold. Gold has a history of trending higher longer-term. For 2013 we expect gold to remain in the range between $1800 on the upside and $1500 on the downside.
The crude oil market is long-term bullish and is currently trapped between support at $85 and resistance at $98. For the past two years, crude oil has traded between $110 on the upside and $85 on the downside. We are closer to support than resistance, at the moment. The wild card in all of this is the Middle East, in particular Syria who is tied to Russia, who is a large oil producer. How that plays out remains to be seen at this time. If everything stays the same, we would expect to see crude oil stay within the trading bands of $85 and $110 for most of 2013.