Alright guys and gals, I'm getting a late start with today's newsletter, so we'll keep it short and sweet. What's the cliche? "Just stick to the facts?" That's what we'll do here ... just stick to the facts, starting with a housing fact that wasn't a surprise at all. Yes, It Was a Huge Week for Real Estate Yesterday we told you we got not one but two pieces of encouraging information on the housing front. One of them was, the Case-Shiller Index for July said the average home price in 20 major cities was up 12.4% on a year-over-year basis. The other one was that the FHFA reported a similar 8% improvement in home prices with July's numbers now being tallied. Critics and pessimists could have spun the data to suggest that while the average sales price is on the rise, it's only rising because fewer homes are selling, and the ones that are selling are just the higher-priced homes. With today's number in hand, however, that idea has been trumped. As of last month, new homes are selling at a pace of 421,000 per year. That's better than the expected 415,000, and better than the prior month's annual pace of 390,000. It's still not as strong as the numbers from earlier in the year, but it's step in that direction. What's most interesting about the data isn't the strength, however. What's interesting is that the figure was up despite the fact that interest rates were on the rise for the past couple of months. I mentioned to you a few days ago how there may be something of a "hurry up and buy before rates get any higher" mentality driving real estate sales right now. The more I think about it though, the more I don't actually think that's what's going on. I still tend to feel this is all organic buying rooted in the fact that consumers feel comfortable - and are capable - of buying a house. The only other economic data we got put on our plate today was August's durable orders, which were (to be blunt) uneventful. Orders were up 0.1% overall, and down 0.1% when taking transportation orders out of the equation. It's not a game-changer in either direction. We'll get the third and final figure for Q2's GDP change tomorrow. That shouldn't be a game-changer either as long as it's confirmed at the expected growth rate of 2.5%. Anything above or below that could cause fireworks. Five Losses in a Row, and Nary a Floor in Sight Well, the bears quietly led stocks to their fifth losing day in a row. It's the longest losing streak we've seen in a long time. Yet, I still don't see the market as being all that close to a trade-worthy floor; I'm pegging the first one at the confluence of support around 1680, for the S&P 500. Anyway, the media pegged the reason for today's dip - and the five day dip for that matter - as the current debt ceiling debate unfolding in Washington DC. I think that's more of an excuse than a reason, but whatever ... the media loves to make logical cause/effect assumptions. But, with ongoing fiscal cliff war being waged by your lawmakers, something I read in today's edition of the SmallCap Network Elite Opportunity hit me like a ton of bricks. Here's the salient point from John Monroe: While everyone continues to be enamored with Fed policy, a move lower heading into the third quarter earning's season would have put the markets in a perfect position to continue their trading theme higher, which has worked all year. However, unless we get some sort of major dip heading into third quarter numbers over the next few weeks, I'm going to be a little concerned about the possibility of a short-term top. In other words, if the indexes continue higher over the next two weeks, I don't think there's going to be much room for upside surprise in terms of how EPS correlates to where the indexes might be at the time companies start to report. Holy cow... he's exactly right. While we've all been so caught up with what's going on in Washington and at the Fed, we've been distracted from the much more important data that's going to start being unveiled in just a couple of weeks. Earnings and any earnings warnings are going to be much more of a bigger-picture driver than anything that happens in Washington will. And make no mistake - this is when the smart money starts positioning heading into earnings season, which unofficially starts on October 8th with Alcoa's (AA) third quarter numbers. If we see a runup between here and there and earnings end up being as mediocre as many think they will be, that could be trouble for stocks in late October and early November. Conversely, a pullback (a more serious pullback) between now and then could set up the usual Q4 buying opportunity. Honestly, I'm kind of hoping we see the latter possibility play out. It's just another example of the kind of "on top of it" insights the SmallCap Network Elite Opportunity's subscribers are getting every day. If you're not a subscriber, you ARE missing out. We'll be keeping Q3 earnings in mind as well as we navigate things from here, but kudos to the SCN EO for remembering where we were on the calendar. You can still get a free trial by clicking here. Or, copy and paste the following link in your browser: http://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=SCN+Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Anyway, today's action was...meh. Stocks may have lost ground, but more than anything we're still trapped in a trading range while investors find their bearings (or get some sort of convincing idea about what's in store). The VIX is also trapped, above its 100-day line but below its 20-day moving average. Volume was average too. I know it's not a very sexy or scintillating notion, but the smart move here is just to keep chilling out on the sidelines and let everyone else eventually show their hand. Traders may not be as bearish here as the recent chart would suggest. We'll be here to point out the decisive clues when we get them, but we're not going to make clues up or make them bigger than they are - traders are just on the fence here. We'll start looking at third quarter's earnings forecast, the market's valuation, and how that may affect the near-term chart with tomorrow's newsletter. See ya then.