stocks in the spotlight - The Current Market

The indices closed mostly lower on the week, but not too much lower, and mostly because if we take out air-o-planes from the durable goods orders we end up not so good.

The economic recovery appears to be stalling as companies cut back last month on their investments in equipment and machines and Americans bought new homes at the weakest pace in decades.

The Commerce Department said orders for big-ticket manufactured goods increased 0.3 percent in July, but that was only because of a 76 percent jump in demand for commercial aircraft.

After removing the volatile transportation category, orders for durable goods fell at the steepest rate since January. And business orders for capital goods took their sharpest drop since January 2009, when the economy was stuck in the deepest recession in decades.

The Commerce Department told us new home sales fell 12.4 percent in July from a month earlier to a seasonally adjusted annual sales pace of 276,600. That was the slowest pace on records dating back to 1963. The past three months have been the worst on record for new home sales.

The weak sales mean fewer jobs in the construction industry, which normally powers economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

The two reports are likely to increase worries that the economy could easily slip back into a recession. Also, a report that showing sales of previously owned homes fell last month to the lowest level in decades.

Unemployment remains near double digits and job growth in the private sector is slowing.

More than 600,000 new homes were sold annually from 1983 through 2007. After the housing bubble broke, sales plunged to 375,000 last year and the weakest yearly total on record.

Builders have sharply cut back construction in the face of weak sales. The number of new homes up for sale at the end of July was unchanged at 210,000, the lowest level in about 40 years.

Due to the sluggish sales pace, it would still take more than nine months to exhaust that supply, above a normal level of about six months.

New home sales were down nationwide. They fell by more than 25 percent from a month earlier in the West, 14 percent in the Northeast, 9 percent in the South and 8 percent in the Midwest.

The story never seems to change much anymore. Its the same-o - same-o, over & over again. No jobs, houses remain a bad investment and the government, for lack of any common sense, keeps throwing money at all the wrong places.

The Obama Administration is attempting to sell us on the idea the economy is growing, but it seems to be quite obvious the wrong message. As long as they believe their strategy is working the longer it will be before they realize it is not and the worse the economy will get.

We cannot buy our way out of the worst recession ever to hit the USA, if we continue to award banks and brokerage firms for the mess they created. Some one needs to tell this current administration that you start out by feeding the bottom of the fish bowl first, not by feeding the sharks first.

With most of the indices hanging around in correction territory, with discounts to the 52 week high greater than 10% and a few closing in on the 20% discount level (bear market), the road ahead appears to be weaker than anything else.

I am having trouble believing the markets have found their low points yet and we could easily see new lows on the markets. If the indices fall to bear market territory we could see further falling. Finding reasons to feel more bullish are few and far between.

There are few reasons to believe the dollar will climb much at all, and few reasons to believe other currencies will jump in to replace it over the near term. This will have a tendency to keep the precious metals high for some time to come, but like all others, once the &%$ Lady sings the metals will fall fast, just not yet.

The government lowered its estimate of second-quarter economic growth to a 1.6 percent annual rate from 2.4 percent, although the figure on consumer spending was revised higher, and this is telling us the recovery is slowing down, although it never was moving forward all that fast in the first place.

Gold is still strong, climbing back over the 1200 level for week 4, after staying under it for 3 weeks, after staying over it for 7 weeks. Closing at $1,236.00oz, up + $8.80on the week and up + $75.60for August. Gold closed off - $95.40 for the month of July. Gold hit a record of $1,263.70 to the ounce 11 weeks ago before retreating slightly to $1,257.20, a new record closing high . Gold closed back over the $1100 level for week 27, after staying under it for 4 weeks.

Oil prices closed the week at $76.17 a barrel (October's futures on Friday's close),up + $1.71 on the week and off - $3.78 for August (weekly close). Friday's close is back over the $50 level for week 71, back over the $60 level for week 57 week, back over the $70 level for week 38 and back under the $80 level for week 3, after trading over it for 1 week, after trading under it for 13 weeks.

The record "weekly" closing high is $145.29 a barrel, set 7/3/08. The $75 to the barrel mark is a very strong support level, and staying close to it could last awhile. The increase this past week has to do with a possible supply shortage that probably has little merit.