As early as 2008, stories were warning that the commercial real estate market would fall through the floor and that hundreds of billions of dollars of commercial mortgages would default, says Michael Kahn for Barron’s.

Recently, just the opposite has occurred. Commercial real estate investment trusts (REITs) have been soaring over the past few weeks, and the technical indicators have looked prime.

Kahn says that commercial REITs not only rose, but also outperformed the market the during the current summer rally. The sector halted its decline around November 2008, although it did hit a lower low in March, but not by much.

Commercial property tied to consumer spending patterns such as hotels and shopping malls do remain weak, says Ron DeLegge for ETF Guide, and the rental market has a way to go before stabilizing. If a REIT ETF or investment is appealing, mind the trendlines and be sure to enter and exit with a strategy.

A few related ETFs, although there are many more available:

• First Trust S&P REIT Index Fund (FRI): up 8.4% year-to-date

• iShares Dow Jones U.S. Real Estate Index Fund (IYR): up 10.6% year-to-date

• iShares FTSE NAREIT Real Estate 50 Index (FTY): up 6.9% year-to-date

For more stories about real estate, visit our real estate category.

• iShares FTSE NAREIT Real Estate 50 (FTY): down 11% year-to-date

The gap between U.S. imports and exports grew for the first time in eight months in March, primarily because exports declined, report Jack Healy and Bettina Wassener for The New York Times. On the upside, economists say that the declines in the value of trade between the United States and the rest of the world seem to be plateauing.

For the first time in six months, oil has hit $60 a barrel, Reuters reports. One analyst says that oil is simply riding the coattails of the bounce in equities for now and ignoring the inventory build-up.

• United States 12 Month Oil (USL): up 10.1% year-to-date

The S&P 500 was up 0.7%, the Dow Jones Industrial Average was up 0.8% and the MSCI World Index of 23 developed nations rose 0.8%.

On a sour note, home prices in 20 U.S. cities fell 19% in January, compared to a year earlier. The famous S&P Case-Shiller Index decreased for yet another month, extending its downfall every month since January 2007.  Most believe that this decline in prices can be attributed to a lack of demand and a rise in foreclosures, states Shobana Chandra of Bloomberg.

This bad news in the housing industry seems to be hovering all around the nation.  Of the 20 cities that are measured in the Case-Shiller Index, all 20 show a year-over-year decline sending the index to its lowest level since 2003.  To take the numbers into consideration, one in every 440 homes in the United States is in some stage of foreclosure and this number is expected to increase.

• iShares FTSE NAREIT Real Estate 50 (FTY): down 36.1% year to date

To add fuel to the fire, U.S. consumer confidence is still at a record low.  The sentiment index inched up from the previous month, but not by much.  Most consumers are reluctant to spend money because of an uncertain economic environment, which includes a negative outlook on labor markets and earnings, states Pedro Nicolaci da Costa of Reuters.  Most people are still worried that they will receive a pink slip, or they’re stashing away as much cash as they can and getting ready for a rainy day.

• SPDR S&P Retail (XRT): down about 1.3% in intraday trading but up 12.7% year to date.

There is yet more news coming out of Detroit.  General Motors (GM) and Ford (F) both stated that they will incorporate a plan to help customers who lose their jobs make their car payments.  This is a great way to boost consumer spending in a time where these automakers are shutting down factories, laying off hundreds of workers, eating up taxpayer money and on the verge of bankruptcy.

Kevin Grewal contributed to this article.

Today’s rally is supported by the government’s plan to help banks get rid of up to $1 trillion of bad assets of their books.  This is in addition to the Public-Private Investment Program, which will use $75 billion to $100 billion from the $700 billion TARP plan enacted last year, giving the government purchasing power of $500 billion, state Rebecca Christie and Robert Schmidt of Bloomberg.

In addition to getting rid of the bad assets, Secretary of Treasury Geitner’s plan includes the following:

• It is heavily dependent on private investors to step up to the plate and buy up the assets.
• Half of the Treasury’s funds will be placed into a “legacy loan program,” in which the Treasury provides half of the capital going to purchase a pool of loans from banks, with private fund managers putting up the rest. The FDIC will guarantee financing of up to six times the capital or equity provided for such deals.
• The second half will go into a “legacy securities program,” which will generate prices for securities that were backed by mortgages, which are no longer traded because of a lack of confidence in the underlying prices in housing.
• There will be five asset managers picked to manage the troubled assets, and will receive financial backing from the FDIC.

A housing report also came as good news even though prices fell sharply, giving traders encouragement that some of the glut overshadowing the industry is beginning to be lifted. Sales of previously owned homes rose unexpectedly in February, resulting from an increase in investors and first-time homebuyers purchasing homes in foreclosure at bargain prices. The iShares FTSE NAREIT Real Estate 50 (FTY), is up about 5.4% in intraday trading and down 35.6% year to date.

A combination of good news from Geitner and the housing industry sent the Dow Jones Industrial Average up about 4%, to hover around 7,576, in morning trading.

Kevin Grewal contributed to this article.

Stocks get a lift Thursday, as part of their up and down momentum for the week, as investors speculate over the health of U.S. banks, reports the Associated Press. Both the U.S. and British governments are ready to do more for banks to cut costs and smooth out rough areas.

Meanwhile, Obama has put a $4 trillion price tag on the new budget saying that is what it will cost to run the U.S. next year. That will be a whopping $1.75 trillion more than the President expects the government to raise in revenue, creating the largest federal deficit in real dollars since the country was fighting World War II, reports Kenneth Bazzinet and Michael Mcauliff for Daily News.

Listing a series of wasteful programs that have already been found, Obama said his administration was already piling up savings in the future.

• SPDR KBW Bank (KBE) up 10% in one day; down 42.6% over three months.

New home sales are at a record low annual pace in as of January. The Commerce Department reported Thursday that sales fell 10.2% to a seasonally adjusted annual rate of 309,000, the worst showing on records going back to 1963, reports Jeannine Aversa for Associated Press. It appears that lower mortgage rates can not help trigger a buying spree for potential buyers, as the state of the economy weighs over heavier.

• iShares FTSE NAREIT Real Estate 50 (FTY) down 15.8% over three months; up 1.4% over one week.

Americans claiming unemployment benefits is over 5.1 million, more proof that the recession is hitting employers hard. The Labor Department said Thursday that first-time requests for unemployment benefits jumped to 667,000 from the previous week’s figure of 631,000, reports Christopher S. Rugaber for Associated Press.

Dell (DELL) is reporting earnings today after market close, and the one-time largest exporter in Ireland is going to shave 2,000 jobs from its force, as they make a move to Poland. Evidently workers will take cheaper wages in Poland, reports Frank Barry for Marketplace. A cut of 2,000 jobs in Ireland is a substantial number for the country, and jobless workers will either pull unemployment benefits or emigrate to find a new job. Australia seems to be the destination of choice as of now, as the recession has hit Britain hard.

Earnings reports are due out later today, after market close.

The National Association of Realtors said Wednesday that sales of existing homes fell 5.3%, flashing back to 1997. Potential buyers are waiting on the sidelines to see what President Barack Obama has planned for the housing industry and economy at large, reports Alan Zibel for the Associated Press.

The median sales price in January plunged to $170,300, down 14.8% from $199,800 a year earlier. An unclear picture of the job market, a seemingly bottomless housing market and unstable credit and banking system, along with lost retirements, are all factors contributing to the malaise.

• iShares FTSE NAREIT Real Estate 50 (FTY): down 13.9% over three months; up 2.9% over one week

Thus far, banks are saying they have enough money, with enough capital to keep them afloat, however, this may not be the capital they need. The issue is coming to the fore as federal regulators start administering a tough new “stress test” to 20 large banks on Wednesday to determine how the banks would withstand a severe economic downturn, says Eric Dash on The New York Times.

Up until last Fall, investors focused upon Tier 1 capital, which consists of common stock, preferred stock and hybrid debt-equity instruments. Now, however, they are focusing on what is called tangible equity capital, which includes only common stock, saying it is a better way to measure the risk in bank shares.

The difference is technical, something an accountant would study, but t does answer the questions: Are the nation’s banks sound? And are bank shares a good barometer for the health of the financial system?

In last nights’ speech, Obama addressed the need for tougher financial regulations, to restore trust and accountability within the financial markets. The President – echoing Federal Reserve Chairman Ben Bernanke earlier in the day – spoke directly about the need to resolve the financial crisis if we’re to have any hope of sustaining a recovery, reports Aaron Task on Tech Ticker. The downward spiral has to be broken so that business will resume.

• Financial Select Sector SPDR (XLF): down 26.8% over three months; up 1% over one week

For the month of January, massive layoffs continued: Companies from a wide range of sectors announced tens of thousands of layoffs, including Home Depot Inc. (HD), Boeing Co. (BA), Pfizer Inc. (PFE) and Caterpillar Inc. (CAT). The Labor Department reported that mass layoffs, or job cuts of 50 or more by a single employer, went up to 2,227 in January, says Christopher S. Rugaber for the Associated Press.

Canadian telecom equipment company Nortel Networks Company is bankrupt and plans to cut its work force by 3,200 jobs worldwide. Nortel filed for creditor protection Jan. 14 in Canada and the United States, according to the Associated Press.

Professor Robert I. Shiller of Yale University has created the useful tool, the cyclically-adjusted price-earnings ratio (CAPE), that helps measure stock market valuations, reports Henry Blodget for Yahoo! Finance. The CAPE shows a picture of the market’s value regardless of business cycles.

He has provided this tool because profit margins are mean-reverting. Taking single-year P/E ratios would provide misleading market values. Stocks would look cheaper in boom years, because of high profit margins, or stocks would seem expensive in bust years, because of low margins.

Shiller’s P/E has fallen below fair value for the first time in 15 years, with the market’s cyclically adjusted P/E under 14X, long-term averages around 15X. Shiller is waiting for the P/E to drop below 10X, which other major market lows have also done.

Also according to Shiller, the housing sector is nowhere near its bottom, remarks Henry Blodge for Yahoo! Finance. The Obama plan for a market turnaround won’t be as quick to affect the housing sector and U.S. house prices are likely to have only fallen halfway to fair value.

• iShares FTSE NAREIT Real Estate 50 (FTY): down 3.9% in the last week; down 9.9% in the last month

Analysts’ reactions to this plan is is dicey at best, as the chances that the rescue will trigger a housing recovery that in turn will boost stocks are small. Many analysts predict that this bailout will have little or no effect on the markets at all, reports the Associated Press.

Here are five observations about the housing bailout plan:

1. Who knows if it will work? The Obama administration pins its hopes for a housing turnaround on a plan that centers on making mortgages more affordable through lower interest rates and refinancing. Some analysts wonder why the plan doesn’t take a more direct approach toward principal reduction. The bigger question is whether homeowners can afford their reduced mortgage payments and still afford their homes.
2. Banks get minimal help. A recovery has to be led by the banks, and one part of the plan calls for judges to be able to step in and force banks to lower payments. Analysts say that will weaken bank balance sheets by reducing the value of the mortgage-backed assets and thus put pressure on share prices. In the end, you are left with the same credit risks and lower-yielding assets.
3. Psychological benefits are possible. Many analysts believe what this bill does more than anything is lift overall sentiment. While this plan is not likely to yield the turnaround Wall Street and others want to see, it can give way to a “cautious optimism.”
4. Or, it could make things worse. The worst-case scenario is that the plan to prop up troubled mortgages will not address the need for housing prices to fall to sustainable levels, which was the original intent. By putting off a foreclosure, it may only be delaying the inevitable and using more valuable taxpayers dollars in the meantime.
5. Investors should remain cautious. The scope of the homeowner relief plan is marginal at best. The majority of advisors do not use this bailout as a springboard for many to jump back into the market. At best, moderate spikes in consumer spending could abound, as well as ETF investors playing market movements to make some extra cash.

• iShares FTSE NAREIT Residential (REZ): down 14.7% over three months; down 11.6% over one week

• iShares FTSE NAREIT Real Estate 50 (FTY): down 8.5% over three months; down 10.3% over one week

The Standard & Poor’s Case-Shiller 20 City Housing Index fell 18.2% since last November, the largest drop since 2000, giving stocks and exchange traded funds(ETFs) something to worry about.

The closely watched index of home prices fell by a marked amount in November giving way to the lowest housing prices since February 2004. The index recorded year-over-year declines over 23 months. Once the numbers are adjusted for inflation, however, they are not record declines, reports J.W. Elphinstone for the Associated Press.

Cities that have suffered the biggest declines are the ones that were in the biggest bubbles: San Francisco, Phoenix and Las Vegas. The good news is that many families are able to get into the housing market as the prices have declined to more affordable levels.

• iShares FTSE NAREIT Real Estate 50 (FTY): down 8.3% over past three months

As a direct result of the glum housing market and the sky-high unemployment rate, consumer confidence fell to a record low in January. The Conference Board, an industry group, said its sentiment index fell to 37.7 from a revised 38.6 in December, reports Pedro Nicolaci da Costa for Associated Press.

Around 13.3% of consumers polled expect the business conditions to get better within the next six months.In January, the expectations index dropped to 43.0 from 44.2 the previous month. Consumers are cleaning up after many years of debt driven spending.

• SPDR S&P Retail (XRT): up 3.8% over past three months

Among earnings:

• Telecommunications company Verizon Communications (VZ) is posting increases of 15% for the fourth quarter, proving that consumers are still reliant on Internet, television and wireless services. The Associated Press reports that the company said it earned $1.24 billion, or 43 cents a share, up from $1.07 billion, or 37 cents a share, a year earlier. Job cuts sliced into share prices at 0.61 cents per share.
• DuPont  reports are cutting 2009 forecasts due to the recession and lowered demand from industrial consumers, reports Randall Chase for Associated Press.

The Federal Reserve begins a two-day meeting today, entering into uncharted territory as interest rates are already as low as they can go, reports Neil Irwin for the Washington Post. Tomorrow, they’ll make an announcement at 2:15 ET.

Buyers are just delaying their purchases, as the unstable economy has caused the lowest level on record to be recorded last November, 2008. Alan Zibel for the Associated Press reports that the index, which tracks signed contracts to purchase existing homes, fell 4% to 82.3 from a downwardly revised October reading of 85.7 in October. Economists were anticipating a reading of 88.

• iShares FTSE NAREIT Real Estate 50 (FTY): down 30.9% over past three months

November also bottomed for factory orders, as the numbers dropped in this month for the fourth month in a row. Manufacturing is set to have a tough year, as the global economy slows and weakness is seen among auto, steel and defense communications equipment, reports Martin Crutsinger for the Associated Press.

Tuesday is a good day for the United States stock markets, as they opened higher than usual, thanks to crude oil prices rising back above $50 per barrel. The price settled just below this. David Jolly and Jack Healy for The New York Times report that oil prices plunged from their summer peaks of $145 a barrel as the economic downturn spread, but they have rebounded from their lows as motorists took advantage of lower gasoline prices.

• iPath S&P GSCI Crude Oil Total Return Index ETN (OIL): down 52.4% over past three months

The downward slide in gas prices everyone was enjoying came to a halt in this month, though, as gasoline prices have crept up a couple cents per day, because of some indicators that the national average could go to $2 by spring. Clifford Krause for The New York Times reports that the latest trend in oil have taken oil prices up 40% per barrel. OPEC cartel cuts may be having their way upon the pricing.

If gas prices continue to rise, consumers may be in for a tougher-than-anticipated year if job security remains loose and home values and investments continue to weaken.

• United States Gasoline (UGA): down 49.4% over the past three months