The December Existing Home Sales report actually surprised to the upside, posting a gain of 6.5 percent versus November. This equates to roughly 290,000 units.

Here’s the bad news: These sales aren’t from eager buyers who got priced out of the market during the run up over the last few years. The buyers are vultures, swooping in and cleaning the carcass. Over 45 percent of the sales were “distressed” according to the report.

That is bad news for the market. It is just the beginning of a viscous cycle with three simple ways you could use to profit.

US data may wake up the markets… Toyota reports a loss…  NZD falls, AUD gains… Will the Rupee shine in 2009?… And Now… Today’s Pfennig!

Currency markets stabilize (for now)…  Data packed holiday shortened week…  China cuts rates… Indian rupee falls… And Now… Today’s Pfennig!

We have almost made it to the Christmas break, but before we do, we have two days absolutely packed with reports. Tomorrow morning there will be five reports released, and Wednesday morning has three more.

Report: Russia, China Biggest Bribers; Coffee Prices Continue Falling; October Existing Home Sales Slump; China Wants More Help From BHP; Yahoo Closing in on New CEO; FedEx Lowers Guidance 26%; Lehman Selling French Unit for $1; NFL to Cut 150 Jobs

Existing Home Sales Down 3.1%; Chile’s 3Q GDP Beat Forecast; SunPower Finishes 18-Megawatt Plant; Cnooc Pushing to Develop More Oil Sites; Alpharma Gets Kinged; Xerox On Track; Oil Jumps 9%;

Optimism has turned to realism on Wall Street.

US stocks slumped today following disappointing quarterly earnings and news that mortage lender Washington Mutual needed a bigger cash injection than expected. WaMu today drew $7 billion in capital, $2 billion more that the amount originally circulated.

News that existing home sales dropped in February also weighed on investor sentiment.

Existing US home sales dropped in February, according a National Association of Realtors (NAR).

The NAR pending home pending home sales index, a leading indicator of existing home sales, dropped 1.9% in February. The index is down 21.4% from the February 2007 level.

There has been plenty of shrill calls for government to intervene in the housing crisis, but what can – or should – government do?