Better than expected new home sales data for August was the catalyst for the S&P 500's move back into the green today, but MoneyShow's Jim Jubak demonstrates that that doesn't eliminate worries about future market down days.
Tuesday's drop in the Standard & Poor's 500 (SPX) marked the third straight losing session for the index. That was the sixth three-day drop in the S&P 500 in 2014 but the index hasn't had a four-day drop since December.
Today put an end of the possibility of the first four-day drop since December. As of the close in New York, the S&P 500 was ahead 0.78%.
The streak of down days had started to worry those of us who think the current weakness-after the index hit a new record on September 18-is just the normal backing and filling that happens near a new market high and especially near a high that comes near a big round number, such as 2,000.
Today's gain doesn't remove those worries-the S&P 500 at 1998 is still below 2000 again-and there still remains a good chance that the market will test the S&P's 50-day moving average at 1975. But absent another dose of bad news-such as a step up in growth worries from China-right now, it looks like the 50-day moving average will hold.
The impetus for today's move into the green was better than expected new home sales in August. Sales increased to an annualized 504,000 in August, up 18% from July's rate. That was the highest level in more than six years. Economists surveyed by Briefing.com had expected an increase to 435,000. The median sales price fell 1.6% in August from July, according to the Commerce Department. A decline in median sales price argues that this good housing news could run into September.
