Top technician Jonathan Krinsky explains why recent consolidation in the market could present a massive buying opportunity in the second half.» Read More
Housing has experienced an incredible recovery. Though still far from the elevated levels of 2006, the S&P Case-Shiller Home Price Index has increased by 8 percent over the past year, and the S&P Homebuilding sector has enjoyed nearly triple the gains of the S&P 500 over the past year.
But is this growth organic, or is it simply a result of the artificially low interest rates fostered by the Federal Reserve's quantitative easing program?
"The housing recovery we have seen is not, in fact, a QE bubble," CIBC World Markets chief economist Avery Shenfeld told CNBC's "Futures Now."
This is not merely an academic question. As traders hold their breath for the Fed to begin tapering its asset purchases, the question of whether housing can continue to grow without the Fed has become critical.
Shenfeld believes that housing growth will not merely continue—it will accelerate, even if mortgage rates rise due to a Fed exit.
"Mortgage availability actually remains very, very tight," Shenfeld said. "I think that as the mortgage market recovers, which it will with recovering consumer credit, we'll get more support from mortgages for the housing rally in 2014, even if mortgage rates are in fact higher than they have been—because mortgage availability will be that much better."
(Read More: Another Housing Market Bubble Brewing)
After all, mortgage rates are so low that a move higher should not do much damage, the economist said.
"Remember that today, we're sitting on 30-year mortgage rates that are under 4 percent," Shenfeld noted. "Even if we push those rates up another 50, 60 basis points, we're into the mid-4 percent range on a 30-year mortgage. Remember that in the last cycle, anything under 6 percent was a screaming bargain."
(Read More: Best ETFs to Play Housing Boom)
Gold is gearing up to make a huge move one way or another. So which way will it go?
Buyers continue to test the crucial level of $1,422. In the event that $1,425 prints, shorts and those standing vigilant should briskly drive prices back above $1,450, sending gold on its way to test the multiyear low of $1,523. Not too long ago, gold sliced through that low like a hot knife through butter.
On the other hand, if the gold bulls (or the gold bugs) can't get $1,425 to print, the bears live a bit longer.
(Read More: Gold Rises After US Jobs Data Misses Forecasts)
Gold is searching for direction.
Gold followed up on Friday's near-$40 swing lower by stabilizing above major support, and August gold futures retested a high of $1,416.5.
Indeed, as data have become more mixed, the likelihood of seeing a curtailing of the bond purchasing program diminishes. On Monday, Atlanta Fed President Dennis Lockhart maintained that the central bank is committed to its bond-buying program, bringing further support to the metal.
The Dollar Index has traded sharply lower over the last few trading days. In this scenario, we would normally expect gold to benefit from a corresponding bid. But the fact that gold has traded in relative calm and has not broken out to the upside leads me to believe that the negative forces affecting gold remain in control.
This thesis will be confirmed if the August futures contract trades down to $1,384. The immediate downside objective would then be $1,357. A subsequent trade above $1,403 would convince me that I was wrong.
S&P 500 futures have stabilized following Friday's massive selloff.
Friday's decline put the June S&P futures at a low of 1,626.25, below the major 1,631 support level. Investors hit the sidelines as they began to fear that the backstop put in place by the Federal Reserve, to the tune of $85 billion in bond purchases a month, will be curtailed.
On Monday, ahead of ISM Manufacturing data, June S&P futures reached to retest the 1,639-1,642 pocket, as many have begun to believe that a curtail in bond purchases is already priced in following the drop.
Doug Kass has long been a bear on gold. In fact the founder of Seabreeze Partners Management engaged in a heated debate about gold with Euro Pacific Capital's Peter Schiff on the April 16 episode of "Futures Now," telling the ultrabullish Schiff that gold has "no intrinsic worth" and is "purchased by buyers in the hope that someone else—who knows that gold will forever be unproductive—will pay more for it in the future."
(Read More: Kass and Schiff Feud About Gold)
But now, Kass has become one of those very buyers. And why not—after all, he believes that someone else will pay more for it in the future!
"There's a time and a place and a price for everything," Kass said on Thursday's episode of "Futures Now." For Kass, this is now the time to buy gold.
As Kass wrote earlier this week, "Negative sentiment in gold has become extreme." So for Kass, gold now "provides a contrarian's appeal."
Indeed, Kass sees bearishness everywhere he looks. "The sharp price drop in gold has brought on a growing short position," he wrote. And "Credit Suisse, JPMorgan and Goldman Sachs have recently slashed their gold price projections. I view this surrender as consistent with a possible contrarian signal."
For the 10-year Treasury yield, it's been a May to remember.
Over the course of three weeks, the 10-year yield have risen from 1.65 percent to 2.15 percent. Although not unprecedented, this type of movement is rare. It's important to remember the causes of the move before we take a shot at trading it.
The surge in yield began when the market began to consider the possibility of the Federal Reserve ending quantitative easing. The velocity of the move, however, was probably caused by a realization that an overwhelming number of positions were not adequately hedged. Most of the selling that we've seen in futures markets appears to be rushed, as many come to grips with the possibility of considerably higher rates.
That being said, markets do tend to be panic-driven, and often overshoot reasonable targets in the short-term. Although I do believe that a 2.40 percent yield is the medium-term target, there is the potential for a quick move back down to 2.06 percent yields.
Gold is in a holding pattern.
Gold rallied nearly $30 from the lows on Tuesday, running stops just above $1,397 and testing $1,401. The rally definitely caught many traders off guard, especially since the market had been grinding lower all morning, reaching as low as $1,372.10.
With the market settling right between the high and the low, the defined range continues to be between $1,364 and $1,397. Gold will truly need to close outside of these levels to pick up any directional momentum in either direction.
The central banks of Russia, Kazakhstan and Azerbaijan all boosted their gold purchases in April, according to a report on Monday from the International Monetary Fund.
Together, the three countries bought up some 24,125 pounds of gold in the month. And as a whole, central bank net purchases contributed to more than 11 percent of the demand for gold in the first quarter of 2013, according to the World Gold Council.
So can the central banks save gold?
"I don't think that central bank buying is going to actually stop this decline in gold," said Kathy Lien of BK Asset Management. That said, central bank purchases "are certainly stemming the slide, and gold would probably be closer to $1,200 if it wasn't for this demand by central banks."
So why doesn't she think those same purchases can save gold?
"You've consistently seen central banks increase their purchases over the last couple months," Lien said on Tuesday's episode of "Futures Now," "and yet you've still seen gold prices fall."
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