Today we got more news that was good, but less so than in previous months. Consumer confidence sagged to 49.5 vs. 54.5 in August. This is about what we’ve been expecting, given a number of forecasts that indicated a slower 4th quarter economy. It looks like Cash for Klunkers moved through the numbers like a mouse through a snake.

The market reacted by selling off as much as 70 Dow points, and clawing back to -17. The strongest ETF’s were IHI, OIH, EOD, XLV, IHF, EWZ, SMH, TLT, PJP, VOX, above 0.5%.

What’s notable in this list is the strong health care sector, as represented by IHI, XLV, IHF, and PJP. We will buy XLV tomorrow if it continues up.  

Weak areas are oil, Australia, real estate, nuclear energy, Japan, and Asia-pacific. We may reduce our exposure to foreign ETF’s by dumping Australia (EWA) or Asia-Pacific (EPP), however the total foreign fund group is constantly shifting leadership among members of the group.

Tomorrow is another heavy news day with Durables, Personal Income, and Claims before the open, Consumer sentiment at 9:55 EST, and New home sales at 10:00 EST. If the durables are ok and jobs improve, the housing might give the market a nice kick upward at 10:00AM.

Have a great trading day,

Paul Accampo