Selling continues Friday, leaving the major market indices down for the week. The Dow ($INDU) fell 42.25 points to a level of 9,665.19. The S&P 500 ($SPX) lost 6.40 points to 1,044.38. The Nasdaq ($COMPQ) gave up 16.69 points to 2,090.92. Volume was light on the session with the NYSE trading 1.19 billion shares and the Naz turning over 2.39 billion shares. Market breadth was negative by a 14-to-16 and 12-to-16 margin on the Big Board and Naz respectively.

Further data on the housing sector was disappointing Friday, as was a report on durable goods orders. However, this news was partially offset by a better than expected consumer sentiment report. Research in Motion (RIMM) provided a bearish outlook, sending its shares sharply lower. Overall, stocks fell for the first time in three weeks as traders took profits.

New home sales came in at 429,000 units on an annualized basis, well below estimates for a figure of 445,000. July's figure was revised lower to 426,000 from the initial reading of 433,000. Unfortunately, home prices were disappointing as well, falling 9.5 percent in August to a price of $195,200. However, low prices have helped ease supply with 7.3 months of inventory in August at the current sales rate, its lowest rate in more than 2 ½ years. Shares of KBHome (KBH) fell 8.52 percent after the home builders CEO stated that he doesn't see "meaningful improvement" in the sector in the near term.

Durable goods orders in August fell 2.4 percent when estimates were for a gain of 1.0 percent. Orders excluding transportation were flat after rising 0.9 percent in July. In the past year, new orders for durable goods are down 20.2 percent, an improvement from July's decline of 22.8 percent. This data reminded traders that the economy is still weak and a recover is not going to occur in a straight line.

Shares of RIMM fell 17.05 percent to a price of $68.90 following the release of the company's earnings release. The maker of the BlackBerry smart phone bested earnings estimates for the quarter, but this was offset by disappointing sales and a less than optimistic outlook. The company's outlook raised questions about whether smart phone makers like Apple (AAPL) and Palm (PALM) are cutting into their market share.

At least consumer sentiment was better than expected in September as measured by the University of Michigan. The index rose to 73.5, up from 70.2 mid-month and 65.7 in August. Next week's economic calendar is full of important data, including the employment situation report for September.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site