Today at 10:00am, Existing Home Sales will come out and let investors know how the residential housing market is doing. The number can help investors gauge the housing market's behavior on a monthly basis. In essence, existing home sales measures the amount of turnover in currently occupied buildings. It can be used as an indicator measure the housing market's health as well as the overall economy's health.
Positive numbers essentially mean that existing residential property is being sold successfully. If the number beats estimates, that would be a positive indicator for the housing market. The housing market is important for the overall economy because investment in property and equipment are significant for the majority of companies and individuals. This would signify increased economic confidence.
This morning, traders will hope for existing home sales to be higher than estimates of 5.03 million. If the number is higher than the estimate, equity market futures will immediately move higher, and barring unforeseen European news or other macroeconomic news, will set the stage for the US equity markets.
Long-term investors should also keep in mind the numbers from the prior period. The number comes in every month, so long-term investors should keep track monthly snapshots of the housing market. Any aberrations or sudden drops could mean that consumers are wary about the housing market and the economy in general.
Investors should also keep in mind that the holiday season may artificially alter claims. There is the chance that housing numbers will be artificially lower, since many citizens tend to be grounded during the cold winter. Housing purchases are also less likely to occur during the holiday season because many Americans place added value on gifts for friends and family. The spirit of giving also tends to tighten pockets, so many Americans not be looking for new property as well.
Consumers have a few options when it comes to understanding the US economy. The housing numbers indicators that could help investors gauge where the economy is heading into the future. Investors should also keep up with the news via Benzinga Pro to stay on top of major developments that move markets.
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Bullish View:
Traders who believe that housing numbers will be positive might want to consider the following trades:
- Long US Equity futures by purchasing shares or call options. If you go with the options strategy, you could purchase a straddle just to reduce risk associated with the bet.
- Long the US Dollar Index, which typically reacts well to positive housing numbers. You could also short it against another currency like the Euro.
- Purchase option straddles of an ETF that tracks US equities like the S&P 500 SPDR SPY.
Traders who believe that housing numbers will not be positive may consider the following positions:
- Short US equity futures. The futures market typically relies on technical analysis for entry and exit points, so identifying the next support level may be useful.
- Short the dollar index if existing home sales is negative. This would be majorly poor for the economy and for the currency itself.
- Short the Euro, which could go down as investors fear that Europe will be worse-off than the United States. Bad US housing data could indicate to Europeans that their own housing situation may not be positive in the coming months.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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