Markets sold off to begin the week Monday with the leading Nasdaq taking the brunt of the blow falling 1.1%. Notice the volume trends for that benchmark as volume tends to gain on losing days, and shrink on sessions that rise. Not the type of tape bulls want witness. Price does generally follow volume. The market ignored some news that is normally seen as constructive, with a couple buyouts of SIAL and DRC. Energy was one of the toughest hit sectors Monday, with pessimistic news out of China sending the group lower. The technicals gave you the heads up well before the news came out giving you ample time to place trades. Housing continues to dampen spirits, as a brief glimmer of hope courtesy of an LEN earnings report last Wednesday has been squashed. It has now given basically all those gains back and the XHB is lower by almost 4% in the last 3 sessions after hitting a brick wall at its 200 day SMA. Like the energy group you would be hard pressed to find any names trading north of their 50 day SMAs, a sign of basic relative strength. Keep in mind that the XHB however is not a pure play on the homebuilders as three of the top four holdings are WHR HD and LOW. Housing data has been slow, and perhaps the strength in some of these names are just homeowners making small purchases and add ons. They just are not doing it at PIR.
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