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Resiliency Rules Again

Again, the watchword for stocks is--RESILIENCY. For the fourth day in a row, the S&P 500 is coming off its lows for the day and moving toward the highs late in the day.

The late-day rally has been led by tech (NASDAQ went positive just before 2 PM ET), as well as by some consumer discretionary stocks.

Housing is key on the Case-Shiller report. Notice:

Home building stocks are again mostly positive; the home building index has risen 23 percent in the last 11 trading sessions;

Lumber prices are up 5 percent today and have rallied 10 percent in 2 days (some of this is due to production cuts)

Building supplier Masco was surprisingly positive on its sales view this morning, expecting a full year profit; stock up 13 percent.

Early on, the markets focused on the consumer sentiment numbers, which have been disappointing for the second straight month.

It's never smart to tell the market what it should be doing, but that concern is misplaced: the Case-Shiller home price numbers are potentially a game changer.

To recap, home prices for May in the 20-city index are:

1) 0.5 percent higher than April (the first month-over-month increase since July 2006!)

2) 17 percent below those of a year ago (still poor, but the rate of decline is easing)

3) 32 percent off their peak prices (reality check!)

The analyst community has reacted positively to the new data. In the last several hours, analysts have sent out several notes, all of which have had a positive tone. A sampler:

Nomura: "In a nutshell, the recent data suggest the decline in US house prices is coming to an end much sooner than expected."

Buckingham Research: "If the April-May sequential improvement continues, it may indicate that a bottoming of home prices is close or may have been reached."

Soleil: "We view the data as a good indication that housing is working to bounce along a bottom."

But stabilization does not we are going to see a big price jump any time soon. Bank of America was typical of analyst remarks in this respect: "Tight credit conditions, rising unemployment and mounting foreclosures are expected to keep downward pressure on sale prices."

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