What has been a tradition in this market where so many hair triggers are set to instantaneous computer exploitation of every incremental data point is a complete lack of memory from day to day. A bad labor report nearly 4 weeks on a Friday ago was completely forgotten by the following Monday. A "good" GDP report last Thursday was completely forgotten by Friday. Whereas in the past you built a mosaic of the market over time, today's era of market has almost no sense of memory outside of the current 6.5 hour session.
ISM Manufacturing (only 12%ish of the economy mind you) came in better than expected and so did pending home sales and construction spending. ISM Services (Wednesday) is the far more important report but people still seem to think the US economy is like it was in the 1960s/1970s with their focus on manufacturing. Different importance in a few rust belt states....
As for why we are building out new construction when we have 18M empty homes, and countless extra commercial real estate is a question you have to ask your federal government. Consider it the Japanese plan - build things to keep people working, even if there is no need. [Feb 8, 2009: NYT - Japan's Big Works Stimulus is a Lesson]
Very difficult to apply techniques in such a news driven environment; at this point we are hovering right around the 50 day moving average again. It just shows you have to take profits quickly in this environment because the entire landscape can change on 1 news report. We'll expect to herky jerk again Wednesday and Friday in similar fashion - guessing if its up or down is akin to placing your chips on red or black.
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