Worse than expected sales of new homes

December 30

The housing market had been showing signs of slowdown since last 12 months but it has been significantly plunged deeper into last month, with sales of new homes plunging to their lowest level.

The slowdown in housing market has worsened in November even more than most analysts expected, intensifying uncertainties that the US economy may be propel into a recession.

Housing market had been a worse performer in year 2006-2007 following a significant five years rally of record-breaking movement from 2001 through 2005. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners. New-home sales tumbled 9% in the month of November from October to a seasonally adjusted annual sales pace of 647,000 as per the Commerce Department reported Friday. That was the worst sales pace since April 1995.

According to many economists the worse performance of housing market will still continue in the coming year of 2008 and probably will keep rising. The crises in housing and mortgage market meltdown have lifted the probability that the country will fall into a recession.

Wall Street ended with an unpredictable week hardly mixed Friday after a government report of a sharp decline in new home sales stimulated fear that weakness in housing will keep on to afflict the economy. The major indexes lost ground for the week. The Dow Jones industrials, following an unpredictable session, managed to grasp out a small gain even as the bleak home sales report fueled to some stock market investors' angst. The Dow closed marginally up 6.26 points at 13,365.87.

Regardless of months of volatile stock trading sessions that has seen stocks surge and then relapse, the major indexes are going into the final trading session of 2007 with decent gains: The Dow is up 902.72, or 7.24%, while the S&P 500 is up 60.19, or 4.24 % and the Nasdaq is up 259.17, or 10.73%.

Worst development of housing and credit market had increase the concern of stock market investor as many believes 2008 will be tough year for stock market.

Volatility–a playing game in stock market

There are certain stock investor communities in stock market who feel volatility plays an important role in their profit margin in-fact they like to do stock trading whenever there is significant amount of volatilities in stock market. According to them volatile stock often gives them an advantage to make their stock trading successful. Any significant upward rise in stock which is volatile gives a sell signals while any significant dip gives a buy signal.

Volatility is a significant fluctuation in prices of stocks or swings in stock market. Any significant increase in volatility in stock market concerns a lot of stock investor as it does not gives any perfect direction to stock market but for genuine stock traders it is a positive signal to make money if there is good kind of volatilities in their selected best stocks.

There are many different views on volatility but according to me it gives a good chance for stock trader to become active and make their successful stock trading. Volatile stock shows significant movement in their prices which give chance for stock traders to enter in that stock and exit by making profit. It is a riskier job but for trader it is their daily business part. They know the exact entry point and exact exist point in these type of stocks.

If one has to become expert in trading volatile stock they need to have significant knowledge of stock market as well as has to know how the movements of stock happens and this only can be achieved by consistent monitoring the stock price movement on daily basis. One can use Newton law’s rule while stock trading on stocks which are volatile. According to Newton law’s every action has equal and opposite direction and same law applied to volatile stock also. Every significant upward action in volatile stock should need to have download reaction and every significant downward action in stock should need to have upward reaction.

Any view expressed in this website is solely of author’s personal view. Before stock investing or stock trading you should need to take advice of your stock market advisor.