The stock market rose higher on its first trading day of November. This comes following a weekend in which nine banks were seized by the government and the FDIC’s balance sheet now stands in the red.

It is incredible how the stock market continues to shake of the bad news with any positives they can find. Today’s jubilation includes a report that pending home sales has risen 6% along with Ford (F) posting record profits. It should be no surprise that these two events occurred. The bailout has provided a tax credit for new home buyers to receive up to $8,000 back on the purchase of a home. Escrow must close by November 30th to qualify. The level of foreclosures on the market has increased every month and this has lowered prices and enticed new buyers. These are the only people left that can purchase a home. The ones that already are home owners are fighting to keep their house, while current renters who have savings see the foreclosures as a great deal and an amazing opportunity to live the American dream. Many people that never dreamed of owning a house are now able to do it.

This is simply a result of a large never ending supply with low prices and tax incentives. If the supply of cheap homes continues to hit the market there will be new home buyers and investors willing to scoop them up for bargain prices. The pending home sale figure should not be looked at as a green and red indicator. It just reports. The signal can not tell us if housing is strong or weak. However, the Dow Jones applauded this news with a 100 point run up in the early morning.

Ford Motor Company (F) is up 8% on the day having reported record earnings. This should also be expected as the cash for clunkers deal pushed sales figures off the charts. Anyone that may have been thinking of buying a car in the next 3 years became a buyer in September. This was a great boost to the automakers and has allowed them to show strength for the recent earning season. However, there is no way their sales will be able to continue at this pace for the rest of the year. Not only will there be weaker demand into 2010, all the people that might have bought a car in the Spring have already done so, so sales should be excessively weak in the next quarter.