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I On The Market - Tuesday Update - 04/17/2012

 April 17, 2012 09:49 AM

(By Rich Bieglmeier) Monday was a Yosemite Sam "which way did he go" cross firing of a day at the Dow gained 71.82 points, the NASDAQ lost 22.93 points, and the S&P closed near breakeven after shaving off 0.05 points.

The NASDAQ's weakness put the index at a close markedly below its 50-day average for the first time in 2012. While Monday's market action was mixed, the look of the trio's charts is remarkably similar.

Each index is under its 50 dma and their 12 and 26 day average are on the verge of bearishly crossing the 50 day benchmark. Such a move would be seen as a continuation of the current weary tone.

Minus some unexpected positive news out of Europe and China, iStock believes the NASDAQ and S&P are destined to test March's lows.

[Related -The April 29 Gold Triangle Breakout Update]

NASDAQ: 2900
S&P: 1340

Meanwhile, the Dow has already accomplished the undesirable goal and could fall to 12,600. If the March low support levels fail, then iStock would expect the indexes to retrace 50% of their December to early April gains.

With a good result, today's Housing Starts data could give the market a little juice. Economists believe the upward trend-line will continue with 700, which would be a big improvement from March 2011, but will be flat relative to the last 4 month average.

JPMorgan Chase's Jamie Dimon and Stuart Miller, CEO of home builder Lennar, both announced last week that "housing is near its bottom"; however, Zillow says don't count on it as a ton of foreclosures are about to hit the market.

[Related -Sell In May, But It Is A Presidential Election Year]

iStock cannot not count on all of our digits the number of times a "bottom" has been called on housing. So far, the calls have been as accurate and as laughable as "the end of the world" predictions. We are still here, and home prices recently hit post subprime crisis lows.

With the work participation rate at a 30 year low, 88 million (equal to the entire population of the world's 3rd largest economy, Germany) work-aged people un or underemployed, real wages falling and hiring likely stalling, iStock believes the time is not right for the broken clock theory to make sages of Dimon and Miller.

It is our view that housing will flat line at best for the next 6 months. If Spain's and Italy's rising interest rates force a super-sized replay of Greece 2011, then you can tack on at least another year of home prices creeping lower.



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