The Oxen Picks Report: Rising Dollar Means Oil Down, Homebuilders Finally Show True Colors

We are all eagerly awaiting the CPE Core Price Index and consumer spending reports to help give the market some further direction. However, even after they come out, my suspicions are that this will be a red day for the markets, but that is not to say it is not healthy. In after hours, we really saw very little bullish news, coupled with the Asian markets starting the day in the green and falling to red throughout the day. The European markets opened slightly in the red and trailed away the rest of the day. This has brought American market futures down quite significantly, with the Dow’s opening looking down about 60 points. That will change once we see the CPE Core Price Index and consumer spending numbers. One driver that might pull the market lower are bad earnings. Some of the key companies, such as Pulte Homes (PHM), Centex (CTX), CVS Caremark (CVS), and UBS all reported weak earnings, with CVS just beating estimates by 0.01 after one time costs. Another key figure that will shape up the day is a higher dollar, which should bring down oil and gold prices, thus their respective markets. If those Core Price Index numbers are really positive, as well as, consumer spending, it may erase opening losses, but I am suspecting that it will not matter, similar to the way no one cared about the bullish housing starts one week ago and sold off into them. Investors are ready for profit taking.

Data Update 8:42 AM: Price Index came in at estimates, consumer spending up a bit more than expected at 0.4% rise in July, but income is down more than expected at -1.30% with estimates at -0.80%.

Buy of the Day: ERY

I like the oil markets chances of really bringing up this beaten down ETF. Direxion Daily Bear Energy & Oil ETF (ERY) plays a handful of oil drillers and oil producers and is highly influenced by the price of oil. As it goes down, ERY goes up. With the market being sold off on the higher dollar and things looking bearish on the day, ERY is a solid pick up for the day. It will obviously gap up, but it has potential to make a major move. There is really no major oil producers or miners that have earnings coming out today, and so, the market will be looking to oil prices…