The markets are trying to stay focused on the good news. Since the closing low on March 9th, the S&P 500 has not seen any decline of more than two days duration.
Lowry put it best: "it seems evident that a buy-the-dips mentality has overcome any worries about buying into an overextended advance."
The problem: while there may be a floor under the market, the market's notable advance in the last month is now presenting itself as a growing obstacle.
The Fed's Beige Bookagain illustrated the "fits and starts" that the U.S. economy is experiencing.
While noting that activity contracted or remained weak, 5 of 12 districts said the contraction slowed.
There were other signs indicative of a bottom: "moderation in pace of decline," manufacturing "bouncing along the bottom," some districts see "slight sales improvement" in retail sales, "better-than-expected" real estate traffic.
Today, there are signs of progress on two key fronts: residential/commercial real estate and the airline business.
1) Lower mortgage rates appear to be bringing out more tire kickers: the April Nat'l Assoc of Home Builders Index surprisedto the upside, coming in at 14 (up from 9 in March) and better than expectations of 10. It's the highest level since October, and while it's good news, it's only a sentiment index: it's not clear whether the interest is translating into real buying.
Wachoviaalso had a bullish note out on homebuilders, which moved them up earlier in the day.
They reviewed the usual factors: lower interest rates, aggressive pricing and the Federal tax credit program for first-time homebuyers.
Bottom line: "We believe management tone on CQ1 EPS conference calls will brighten from dourly pessimistic to cautiously optimistic as well."
Data for new home construction will come out tomorrow. There is still an enormous glut of unsold homes.
Want to move the markets? Get the inventory level of unsold new homes below 10 months supply; in February it was 12.2 months supply.
2) More good news on the commercial real estate front: Federal Realty, a shopping center REIT with many properties in the northeast U.S., Texas and California, not only reported stronger leasing activity and higher rents, but also reported it had obtained new financing commitments that would allow them to fully down this year's debt maturities.
Many REITs have successfully floated new equity in the past few weeks, which is also being used to pay down debt coming due.
Goldman Sachs also had positive comments on REITs in general today.
3) Airlines are up double-digits as AMR unexpectedly reported earnings much better than expected: the loss of $1.30 was well below the loss of $1.68 expected.
Unfortunately, there is no guidance for the second quarter, but the rocketlike movement of AMR (the stock moved 25 percent in 10 minutes this morning!) indicates how oversold certain sectors remain.