Home Sales

The Seattle Times reported a big increase in home sales during December, a typically slow month for closings.  Since volume needs to precede price this would be a significant step towards halting the decline in Real Estate prices.  However, one month does not a trend make.  As Seattle Bubble points out, pending sales are not showing as robust an improvement.

There is still room for closed sales to increase, but it will have to be supported by an increase in pendings.  I'll be watching this closely.

Real Estate Stocks - Update

Since my last post, it appears the market continues to believe Real Estate is moving up off the bottom.

The HomeBuilder index hit its target of $18 and now has a couple of tails off the high.  It may need to reset from here, but the market is certainly anticipating an improved environment for the Spring.  I hope the market is right. 

The REITS have been treading water since the Fall.

Great support remains at $53. 

Home Improvement Stocks were buoyed by strong earnings reports.

As anticipated, Home Depot challenged its May high of $36, making it to $35.57. 

10 year Treasury Rates have surged.

There doesn't seem to be any impediments to rates hitting 3.85%.  It doesn't appear to be ready to break the trendline at this time.  Will need to watch.

Banner Bank skyrocketed after it became clear they weren't going under.  The stock has launched over 40% since mid-December.  There ought to be plenty of support at $2.00, where the secondary offering went off.

Outlook 2011 - Interest Rates

Interest rates had a nice yearend rally commencing in November when QE2 was launched.

5 yr rates found a bottom in November and are destined to hit the upper trendline near 22.6.  They will need to regroup lower from there, perhaps near 18.  I expect rates to break the trendline during 2011 and forge higher.

Outlook 2011 - S&P 500

The S&P had a nice run in 2010, up nearly 13%.

After a brisk run in the Fall, the market looks overbought and in need of a pullback.  1200 looks like the most likely candidate for support.  If indeed the market does pullback, it should be bought for a vigorous rally that should ensue.  It looks to me that the S&P 500 ought to run close to 1475 before the rally would be over.  This is the blueprint I will be following until the market shows me differently.