U.S. Equities Open: Home Sales In Focus-Long Trade in the S&P 500
Shain Vernier • 2 min read
August has been a tough month for the U.S. real estate sector. Lagging sales in new and existing homes have made investors question the aggregate strength of the U.S. economy. Today’s trade of U.S. equities indices has been decisively bullish.
Perhaps the release of the Pending Home Sales metric will provide an opportunity to grab a retracement play in today's September E-mini S&P 500 futures contract.
Is It Lights Out For The U.S. Real Estate Sector?
The Hard Numbers
Real estate statistics are viewed by many investors as providing crucial insight into consumption and commercial lending in the U.S. Below are today’s releases:
Event Previous Projected Actual
Pending Home Sales (MoM, July) 1.5% 0.5% -0.8%
Pending Home Sales (YoY, July) 0.7% 0.5% -0.5%
These numbers are weak, no doubt about it. For the fourth time in five months, sales are down. In the wake of the positive GDP report yesterday, this is a curious metric.
It looks as if the U.S. consumer has disposable income, but is not interested in big ticket items. Or, it is a statement on the availability of credit. Banks may be tightening up the real estate lending heading into a likely tumultuous Fall/Winter season.
Either way, lagging home sales are not good news.
Trade Idea: These negative metrics may give intraday S&P 500 bulls a reason for pause. As of now, they are firmly in control, with the September E-mini S&P 500 contract up around 50 ticks. I will be looking to buy the 38% Fibonacci retracement of today’s range on its first test.
A simple 1:1 reward/risk ratio looking for 10 ticks max is a solid way to grab a quick profit and move forward into the U.S. session. Patience is a virtue. No need to rush into the market. If this trade comes to us then great. If not, there is a lot of session left.