…and Perception Verses Reality

In last week’s column I mentioned that the number of items for concern was really down to three: 1. The Commitment of Traders reports shows the “smart” money (large commercials) is betting on a down move. 2. The housing market fall out and 3. Various overbought sentiment indicators are at levels that produced tops in the past. Friday’s release of new housing starts, down 14.3%, for January was a big shock. The lowest estimate was about 6% above the actual number. Because the FED is concerned about inflationary pressures bad news becomes good. Perhaps a slow down in consumer spending will off set wage price inflationary pressures and the FED won’t have to raise interest rates is how the thinking goes.

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Posted by Michael Chapman at 12:52 PM PST