The July Durable Goods Orders were skewed by the 13% increase in Transportation orders. However, the headline number was below expectations and the core capital goods orders were a horrific -8.0%. Then we saw the worst New Home Sales drop in history, down 12.4% to 276,000. There was a silver lining. The 210,000 inventory of homes compares quite favorably to the pre-housing craze average annualized demand of 630,000 (pre-2000s). Since the annual average number of homes destroyed by fires, floods, natural disasters, and condemnation is about 700,000 per year, the current inventory is about a third of the homes needed. Therefore, Homebuilders have been keeping inventories tight. That’s why we saw the Homebuilders’ Index XHB jump 2.9%. The Banking sector may have closed only slightly higher, but it was a reversal off of a new 52-week low that undercut the July low on the Financial Sector SPDR XLF. The S & P dipped to 1040, pretty much right where the May and June lows held. The index did post a minor reversal day to the upside, as did the Dow and the NASDAQ. Despite another rally in the Dollar, the “risk trade” was not taking the heat. The Russell 2000 held above the previous day’s low and gained 1.56% on the day. It looks as though the bad news is priced in for now. I’m looking for the bounce to fill the gap at 1067, although we admittedly face headwinds with the weekly claims due out today and the 2^nd quarter GDP revision tomorrow, which is expected to be quite negative.