August 30, 2009
As in the song by the Downtown Executives, "You'd better get out while you can."
Market tops are made by a process. While this bear market rally rose on good news and bad news it kept rising. Now we are seeing the market failing to rise on even better news. (Intel) If the top is not in yet we are too close to be long anymore.
When the market bottomed in March, the news was drastic. Now the news is ecstatic. (We've save the World)!
The fed meeting in Jackson Hole, Wyoming this month acknowledge that last year they didn't see coming what ultimately happened. This year they praised themselves for saving the world.
Unfortunately, they do not see what is coming again.
States and local governments will not have the revenues to meet their obligations.
Unemployment is still rising causing further strain on housing and foreclosures.
Cash for Clunkers has pulled sales forward and is merely a government subsidy which creates more debt.
While I could go on and on, I'll merely say "get out while you can."
This market is at levels which it won't see for years to come.
The dollar will rise from these levels against all odds which will sink stocks, commodities and commodity related stocks.
Deflation is here and is about to reign full force.
Be prepared.
Foreclosures don't matter in housing recovery
But RealtyTrac's Rick Sharga, who saw no good news in his own report, begged to differ on the overall housing recovery:
" If we'd had this conversation a year ago, and you'd asked me if the housing market could recover simultaneously while foreclosure numbers were spiking, I would have said probably not, but we are seeing some data that almost looks contradictory. We're seeing increased levels of foreclosure activity, and we're seeing price stabilization at the same time. So it could just be that there is so much buying interest because the affordability levels have become basically record levels, and there's this inventory sitting out there waiting for the buyers. The market might be recovering at what amounts to the "new normal" level of foreclosure activity at least for the time being. "
HELLO!!!! Perhaps Rick Sarga should to "RealityTrac" to get a bit more info.
Now I know we all want housing to turn around, but just like all the new government debt, you must absorb the supply to bottom out and go forward. While the high number of foreclosures does mean we're getting rid of bad debts the report also points out new areas of foreclosures such as Kansas, Oregon, Missouri, etc... which reflect the consequences of the high unemployment.
Take advantage of the exuberant bullishness and sell all your stock holdings. As for real estate, there will be plenty of time still to buy cheap. Look towards 2010 thru 2012.
" If we'd had this conversation a year ago, and you'd asked me if the housing market could recover simultaneously while foreclosure numbers were spiking, I would have said probably not, but we are seeing some data that almost looks contradictory. We're seeing increased levels of foreclosure activity, and we're seeing price stabilization at the same time. So it could just be that there is so much buying interest because the affordability levels have become basically record levels, and there's this inventory sitting out there waiting for the buyers. The market might be recovering at what amounts to the "new normal" level of foreclosure activity at least for the time being. "
HELLO!!!! Perhaps Rick Sarga should to "RealityTrac" to get a bit more info.
Now I know we all want housing to turn around, but just like all the new government debt, you must absorb the supply to bottom out and go forward. While the high number of foreclosures does mean we're getting rid of bad debts the report also points out new areas of foreclosures such as Kansas, Oregon, Missouri, etc... which reflect the consequences of the high unemployment.
Take advantage of the exuberant bullishness and sell all your stock holdings. As for real estate, there will be plenty of time still to buy cheap. Look towards 2010 thru 2012.
August 12, 2009
"THE EYE OF THE STORM"
Just like a hurricane, it first hits with maximum fury, then there is an eerie calm before the next wave hits.
That is where we are in the economy and stock market.
Just like in 1929, few could imagine what was ahead in the thirties. Just because some rich bankers jumped from their windows because of their 90% leveraged accounts were wiped out in a single day (on a 10% drop in the market), how could that affect the masses. (We know now). That was merely the first crack in the dam.
We have experienced the first crack in the dam and are now in the "eye of the storm."
Irrational exuberance abounds. (look at the action in FRE [Freddie Mac] this week). Money is flowing to garbage stocks such as that and AIG. Penny stock promoters are back in full force and advertising on the radio. The government is spending money exponentially faster than Bernie Madoff and the public is believing the whole political bag job.
All I can say is "SELL, SELL, SELL."
A quote I have heard more than once is "I'm just waiting to get my investment back before I sell." Meaning the Dow must go above 14,000. Oh, OK...waiting until 2025? Now in all seriousness, it might break 14,000 before 2020, but that's a bit far out to see.
On the short term, we are much more likely to break 667 than 14,000. As a matter of fact, I believe we will at least revisit, if not break 667 before the end of 2010, without crossing 14,000 first. So if you are waiting to sell at 14,000 you might have a long time to wait.
While our sell signal at 956 was quite timely, we obviously did not call the top. Our short sales were stopped out at 912. The biggest mistake we made was not to reverse and go long at that level.
The risk of the upcoming decline is far greater that any advance forthcoming.
The biggest question now is from what price point will the drop start?
Some say we have already topped at 1018.
Our research and analysis could agree but believe we have one more recovery high due this week or next which could push the market up to as high as the 1040 - 1050 level. This is the point to aggressively short. With such a small advance ahead, all shorts or put positions can be purchased here and held through the decline. August options are all closed except for very short term trading accounts.
In the mean time, our spreads are working fine.
Stay tuned and good luck trading or let us manage your account for you.
"THE EYE OF THE STORM"
Just like a hurricane, it first hits with maximum fury, then there is an eerie calm before the next wave hits.
That is where we are in the economy and stock market.
Just like in 1929, few could imagine what was ahead in the thirties. Just because some rich bankers jumped from their windows because of their 90% leveraged accounts were wiped out in a single day (on a 10% drop in the market), how could that affect the masses. (We know now). That was merely the first crack in the dam.
We have experienced the first crack in the dam and are now in the "eye of the storm."
Irrational exuberance abounds. (look at the action in FRE [Freddie Mac] this week). Money is flowing to garbage stocks such as that and AIG. Penny stock promoters are back in full force and advertising on the radio. The government is spending money exponentially faster than Bernie Madoff and the public is believing the whole political bag job.
All I can say is "SELL, SELL, SELL."
A quote I have heard more than once is "I'm just waiting to get my investment back before I sell." Meaning the Dow must go above 14,000. Oh, OK...waiting until 2025? Now in all seriousness, it might break 14,000 before 2020, but that's a bit far out to see.
On the short term, we are much more likely to break 667 than 14,000. As a matter of fact, I believe we will at least revisit, if not break 667 before the end of 2010, without crossing 14,000 first. So if you are waiting to sell at 14,000 you might have a long time to wait.
While our sell signal at 956 was quite timely, we obviously did not call the top. Our short sales were stopped out at 912. The biggest mistake we made was not to reverse and go long at that level.
The risk of the upcoming decline is far greater that any advance forthcoming.
The biggest question now is from what price point will the drop start?
Some say we have already topped at 1018.
Our research and analysis could agree but believe we have one more recovery high due this week or next which could push the market up to as high as the 1040 - 1050 level. This is the point to aggressively short. With such a small advance ahead, all shorts or put positions can be purchased here and held through the decline. August options are all closed except for very short term trading accounts.
In the mean time, our spreads are working fine.
Stay tuned and good luck trading or let us manage your account for you.
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