ETFs

While global stock markets are selling-off, Gold and ETF SPDR Gold Shares (NYSE: GLD) are solidly higher. The move would seem counter-intuitive in light of comments from the FOMC that a number of members want to tighten by the June meeting.

Spot gold last traded at $1387.40, up 1.3%. ETF GLD last traded $134, up 1.56%.

The move in Gold could come as traders blow off Fed speak and see more central bank easing given a contraction of manufacturing in China. Today, HSBC's China Manufacturing Purchasing Mangers' Index fell to 49.6 in May from 50.4 in April, a seven-month low. A reading below 50 signals a contraction of activity.

Moving lower with the price and prospects for the underlying commodity, ETF Market Vectors Gold Miners (NYSE: GDX) has looked like death this year; falling 40% versus a 17% gain in the S&P 500. However, prospects could be turning around, at least in the short term.

MKM Partners Chief Market Technician Katie Stockton thinks a tradable relief rally is likely in absolute and relative terms.

"Gold and most gold mining stocks are in downtrends, with negative intermediate-term momentum, so there is inherent risk to taking counter-trend positions," Stockton said. "With that in mind, we would consider adding some exposure to take advantage of a short-term relief rally within the downtrend with strict attention to risk management. The trade is likely to play out in the near term, or not at all, so we expect to know if it is "working" in the next week or two."

On the technicals, Stockton explains: "GDX is showing signs of exhaustion, having registered a counter-trend "buy" signal per the DeMark indicators on its weekly chart. The “sell” signal from the same model in late 2011 was very timely, increasing the likelihood of some reaction to the upside this time around. There is potential support near current levels, based on the bottom boundary of GDX's downtrend channel, and prolonged oversold conditions have given way to subtle improvement in short-term momentum. An upmove within the channel could be impressive, noting that initial resistance is approximately $39.10. However, noting the negative intermediate-term momentum behind GDX, we are only looking for a move into the mid-$30s."

For a derivatives strategy, the technician recommends the July 28.5/34 call
spreads for $1.22.

iShares Silver Trust (NYSE: SLV) and SPDR Gold Shares (NYSE: GLD) ETFs are seeing some impressive volume as Fed chairman Ben Bernanke testified in front of a Congressional committee.

In part, Bernanke told the Joint Economic Committee that his concerns over financial stability "increased a bit." He also noted that the job market remained weak overall with unemployment "still well above its longer-run normal level."

On monetary policy, Bernanke noted, "A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further. Such outcomes tend to be associated with extended periods of lower, not higher, interest rates, as well as poor returns on other assets. Moreover, renewed economic weakness would pose its own risks to financial stability."

Should quantitative easing measures come to an end in late 2013 or early 2014, gold and silver might see additional pressure on the stronger U.S. dollar, or which both are denominated.

Gold June contracts are down slightly to $1,377.0 per ounce on the Comex, while July silver contracts are up to $22.64 per ounce.

For the full Bernanke testimony, click here.

Existing-home sales rose in April but remain below underlying demand because of limited inventory and tight credit, according to the National Association of Realtors. All regions are showing strong price gains from a year ago.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.6 percent to a seasonally adjusted annual rate of 4.97 million in April from an upwardly revised 4.94 million in March. Resale activity is 9.7 percent above the 4.53 million-unit level in April 2012.

*** The Street was looking for sales reaching an annual pace of 4.98 million.

Lawrence Yun, NAR chief economist, said the market is solidly recovering. “The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing-home sales easily would be well above the 5-million unit pace,” he said. “Buyer traffic is 31 percent stronger than a year ago, but sales are running only about 10 percent higher. It’s become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction.”

Existing-home sales are at the highest pace since November 2009 when the market spiked to 5.44 million in response to the home buyer tax credit. Total sales have been above year-ago levels for 22 consecutive months, while prices show 14 consecutive months of year-over-year price increases.

Total housing inventory at the end of April rose 11.9 percent, a seasonal increase to 2.16 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace, compared with 4.7 months in March. Listed inventory is 13.6 percent below a year ago, when there was a 6.6-month supply, with current availability tighter in the lower price ranges.

The national median existing-home price for all housing types was $192,800 in April, up 11.0 percent from April 2012. The last time there were 14 consecutive months of year-over-year price increases was from April 2005 to May 2006.

Distressed homes – foreclosures and short sales – accounted for 18 percent of April sales, down from 21 percent in March and 28 percent in April 2012. Eleven percent of April sales were foreclosures, and 7 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in April, while short sales were discounted 14 percent.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 3.45 percent in April from 3.57 percent in March; it was 3.91 percent in April 2012.

The median time on market for all homes was 46 days in April, down sharply from 62 days in March, and is 45 percent faster than the 83 days on market in April 2012.

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said market conditions have flipped in the past year. “With homes selling in half the time it took to sell a year ago, buyers must be both decisive and prudent,” he said. “Advice with contract terms and negotiations is where the expertise of a Realtor shines for both buyers and sellers.”

Short sales were on the market for a median of 73 days, while foreclosures typically sold in 43 days and non-distressed homes took 44 days. Forty-four percent of all homes sold in April were on the market for less than a month, while only 8 percent were on the market for a year or longer.

First-time buyers accounted for 29 percent of purchases in April, compared with 30 percent in March and 35 percent in April 2012.

All-cash sales were at 32 percent of transactions in April, up from 30 percent in March; they were 29 percent in April 2012. Individual investors, who account for most cash sales, purchased 19 percent of homes in April, unchanged from March; they were 20 percent in April 2012.

Single-family home sales rose 1.2 percent to a seasonally adjusted annual rate of 4.38 million in April from 4.33 million in March, and are 9.0 percent above the 4.02 million-unit level in April 2012. The median existing single-family home price was $193,300 in April, which is 11.0 percent above a year ago.

Existing condominium and co-op sales declined 3.3 percent to an annualized rate of 590,000 units in April from 610,000 in March, but are 15.7 percent above the 510,000-unit pace a year ago. The median existing condo price was $189,500 in April, up 11.3 percent from April 2012.

Regionally, existing-home sales in the Northeast rose 1.6 percent to an annual rate of 640,000 in April and are 4.9 percent above April 2012. The median price in the Northeast was $245,100, up 5.1 percent from a year ago.

Existing-home sales in the Midwest fell 3.4 percent in April to a pace of 1.12 million but are 9.8 percent above a year ago. The median price in the Midwest was $149,300, up 6.7 percent from April 2012.

In the South, existing-home sales rose 2.0 percent to an annual level of 2.01 million in April and are 14.9 percent above April 2012. The median price in the South was $168,700, which is 10.6 percent above a year ago.

Existing-home sales in the West increased 1.7 percent to a pace of 1.20 million in April and are 4.3 percent above a year ago. Given limited choices and multiple bidding, the median price in the West was $263,600, up 17.5 percent from April 2012.

Japanese shares are indicated higher Wednesday as the Bank of Japan said it would take further steps to curb volatility in Japan's bond markets.

Reports have Japan's central bank boosting its view on the economy for the fifth-straight month, showing that Prime Minister Shinzo Abe's more aggressive fiscal policy is taking shape. Recent moves by Abe, including implementation of a massive quantitative easing program, have caused stocks in Japan to soar to 5.5-year highs while the yen has slipped to 4.5-year lows.

BoJ governor Haruhiko Kuroda played-down the effect of the bond moves, saying, "I don't think the recent rise in yields is having a big impact on the economy...We will continue to monitor market moves and respond with flexibility in the pace and maturities of bond purchases and in market operations."

Japan's current easing program calls for 50 trillion yen of purchases annually.

On watch are iShares MSCI Japan Index (NYSE: EWJ) and CurrencyShares Japanese Yen Trust (NYSE: FXY).