The Good News On A Volatile Day

It's been another volatile day: S&P futures have swung in a 60-point range from the high to low pre-open, but has regained all of its losses and is now near the highs for the day.

While trading has been choppy, particularly given the weakness in Asia, there is good news:

1) New home sales are encouraging. Sales in September were higher than expected, more importantly the inventory to sales ratio dropped to 10.4 months supply, which while high historically is well below the prior number of 11.4. Also, median home prices year-over-year are down 9.1 percent, the lowest levels since Sept. 2004.

Hmm...lower prices, higher sales...good sign. We need more data to establish a clear trend. But consider that there is a huge supply of cheap foreclosed properties that many felt would pull demand from the new home sales market. Didn't happen last month.

2) The fed programs have arrived! We have the Corporate Paper Funding Facility, announcements of capital infusions into banks, and throw in a rate cut from the Fed this week...and there is hope that the long-talked of "backstop" will finally start becoming more real.

Tell-me-something-I-don't know department: Standard and Poor's put out a note on Christmas retail sales this morning...the data is interesting. In the last 10 years, holiday sales have increased an average of 4.4 percent a year, with the worst year being 2001, when sales were only up 1 percent; but the conclusion is not: --they anticipate that retail sales will be flat to down 2. Flat to down 2 percent? Given what we have seen recently, that would be a victory!

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