Housing driven Christmas Rally?

Homebuilders ETF

Well just like I said in the weekend review the market was moving sideways and only something major would move the markets before Christmas. However, the news we got was certainly not what you would call earth shattering by any means. Some upbeat news out of Europe concerning the German's confidence rising and the rise in housing starts in the US beating expectations. My take on the day:

1. It's not the Germans we have to worry about in Europe.
2. The Housing numbers are easily debunked. (see article from Zerohedge.com below)
3. The upshot of the day was the markets wanted to rally and they did. Beware of rallies on low volume.

REMAIN CAUTIOUS

Housing Starts Surge Entirely Due To Year End Channel-Stuffed Multi-Family Units

Submitted by Tyler Durden on 12/20/2011 - 08:55Housing Starts Reality

Once again the US Department of Truth succeeds in fooling the algos: today's November Housing Starts number was a blockbuster: at 685K annualized units, it came higher than the highest estimate (range was 600K to 655K), and certainly higher than the average estimate of 635K. It was obviously higher than the downward revised previous number of 627K. All great: housing soaring, employment must be back. Right? Wrong. One peek under the covers shows where all the "growth" comes from - the entirety of the surge was due to the absolutely hollow 5+ multi-family units which jumped by a whopping 25% sequentially, and which as everyone in the industry knows are nothing but inventory padding by homebuilders who "build just to build." Unfortunately, as the all important 1 Unit structure trendline shows, there is absolutely no improvement in this critical series. But hey - it fooled the robots. And now it will take at least 12-24 hours before vacuum tubes process the reality of this latest spin. By then, however, we may well have had our Christmas rally.