The intra-day low on Wednesday came at 10am when the horrific new-homes sales report was released. You would think that would have been a sell signal, but the market rallied for the rest of the day – including the home-builders; the XHB was up 3.15% on the day.
That, of course, was a classic example of the trading maxim: “how the market reacts to news is more important than the news itself.” When the market shrugs-off bad news, then you know it is in rally mode.
So, now we want to know if the market can keep it up as the week ends with a lot of economic data. The market plunged after last Thursday’s unemployment report, so that will be the first test this morning.