We have a lot of important events coming up this week. It’s the last week of May (good riddance), it’s Memorial Day weekend for the U.S. — the start of summer — and the New Residential Sales report for April 2021.
As we get through the meat of earnings season, you’ll start to notice that economic numbers become big catalysts in moving volatility around and creating trading opportunities in the stock market.
New Residential Sales measures how many new single-family homes were sold during the month before — so this report will have data from April. When the report has a number that surpasses economists’ expectations, it’s considered positive and bullish for the dollar. If the report is lower than expectations, it’s considered negative and bearish for the dollar.
That’s why the New Residential Sales report for April 2021 coming out on Tuesday is so important for investors to pay attention to. This one especially so, since my intuition is telling me many of you might be disappointed with what you see…
These Stocks Could Tumble on Tuesday on Bad News…
As of right now, people are expecting there to be 950,000 new homes built in April.
And I get why everyone is reaching for such a high number — March’s numbers were incredible.
There were over 1 million new homes sold, which is the biggest number of new homes sold since 2006.
As good and dandy as all of this was for March, I noticed a serious pattern of disappointing economic numbers being released for April 2021 data…
If we look back at the other economic releases we’ve gotten this month, you’ll notice a lot of the expectations have been incorrect.
One of the biggest ones was the change in nonfarm payrolls. There were supposed to be 1 million new jobs created in April in the U.S….
Instead, we got nonfarm payrolls that ended up being 266,000 while the unemployment rate rose to 6.1% since there weren’t enough workers available. And if that weren’t bad enough, March’s original estimate of 916,000 new jobs had to be revised down to 770,000.
Then, also in April, the CPI for All Urban Consumers year over year rose another 4.2% while the expectation was 3.6%. This was the largest year-over-year increase since August 2018 and the fastest spike since September 2008.
And when you look at the SPDR S&P Homebuilders ETF (NYSEArca: XHB) chart — after just coming out with the strongest number of new homes in 15 years — you’ll begin to question why it’s now lagging behind…
So what the heck happened in April? And how much should we expect the New Residential Sales report for April 2021 to negatively impact our assets Tuesday?
Check out my short video below to learn more about the New Residential Sales report for April 2021, and see how to analyze the market using a top-down approach.
Be sure to share your thoughts in the comments section below.
And as always, send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
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