New Home Sales Fall to Record Lows – Translation: Buy Buy Buy!

New Home sales fell to a record low in July – much worst than even some of Wall Street’s finest guesses. So what, let’s bid the stock market up and rally baby!

Clearly, there is a disconnect between what the stock market does relative to dismal news like that of new home sales today. So either this means we’ve really bottomed out in the U.S. equity market or traders / investors are buying into a beautiful delusion. My vote is for delusion but the market has proven me wrong before. The magical level of 10,000 on the Dow is acting as huge technical support. My worry is that too many traders and investors are banking on that level holding even though the economy is not necessarily painting a rosy picture.

At best, we’re in a stagnating economy struggling to get back up on its feet. There is clearly no strong trend of recovery in place yet punctuated by high unemployment looming over us all. But Dow 10,000 – really people?

Anyway, let’s see what the herd does tomorrow and the rest of the week. Throwing all conventional wisdom out the window, I have a feeling we’ll close at roughly where we started the week if not a little higher…take that lousy economy!