i tried to attach a chart from my bloomberg and the format isnt supported. sorry. but it looks like we are looking at the same thing.. I se immediate term support, short term top, medium term correction....and long term (1yr+)...i havent a clue.
I think plenty of investors got out of real estate in time. I did in 2005 at the top of the market. Unlike stocks, there was plenty of warning it was coming to an end, with talk of bubble bubble for at least 2 years. When the number of properties on the market doubled (from 77 available properties in an entire zip code to 200...and today there's 22,000 in the same zip code), the writing was on the wall. One benefit of losing your shirt is how hard the old adage about 'capital preservation' hits you and stays with you forever. Lots of people who got into real estate during this bubble learned their lesson from the stock market in '87, and were ready for 2000. I wasn't, even tho I lost money in the market in '87 also... the false sense of security came from the fact that that money grew back, and pretty quickly after that. 2000 was in a class of it's own. The 'mountain of debt' you are talking about are not investors who got burned, they are homeowners who moved up or first time home buyers who didn't fully understand mortgage financing. They got balloon mortgages or adjustable rates... and when the first adjustment came, they were pushed over the top. I am not remotely convinced that many investors were caught that flat. Investors may get adjustable rates, but most do it to flip. That means they are very in tune with the market becoming harder to sell in, and they don't buy another property once that becomes apparent. The housing 'crash' still hasn't fully ended, and it's been going on since summer of 2005... because people are still trying to move their inventory. They lost money? It's like musical chairs, only those who bought within the last year and a half lost money. If you bought a property 3 years ago for investment, even if you have it on the market today at 20% lower than the 'value' (the inflated value that everyone got used to tacking on every month or so), you still doubled your money... that is your down payment money. Or you made money from thin air, if you managed to get 100% financing. In my area, 3 years ago, you could buy a 'typical' starter home for $150,000. 2 years ago, it was $250,000. At the peak of the market, end of last summer, it was $300,000. So the typical investor put that house he bought for $150,000, with 10% down ($15,000) on the market for $300,000 and it doesn't sell. So he drops the price to $250,000. He lost his butt! He lost money! After closing and commissions, plus fix up costs, he's still left with $220,000 or more. Minus the $15,000 initial investment, that $15K made him $70K in cash (assuming they rented the property out upon purchase, at the $150K, they could cover their mortgage). But now... what to do with the $70K? There's no way he's going to buy another house. If investors won't touch the new houses, who's going to buy them, when it's mostly investors selling? This has happened in a lot of areas... but there's a lot of investors with the equivalent of that $70K... burning a hole in pocket. I don't see anyone feeling particularly 'good' about this market. I see ONE guy talking about the bull market, and everyone else on the fence, daily changing their minds, it's going up, it's going down, it's going up, it's going down... It's been flipflopping for the entire year, with a 'rally' for 3 months, a 'crash' for 3 months, another rally for 3 months. I still don't see a 5000 Nasdaq... what kind of rally doesn't even touch the 6 year old high? How do you call that a bull market, when you add in the hidden rate of inflation and the loss of interest of an investment made 6 years ago for many people? If you were a broker 7-8 years ago, you'll also remember that the DOW crept up before NASDAQ took off too. I am wishy washy about the DOW big time right now... but not entirely confident about general market conditions... at least til most of the investors have gotten their money out of the game by seeing how much inventory drops in Real Estate. Hrm... 'wall of worry'? I'm not feeling bullish... Stock Trad3r appears to be the only bullish one here... and look at the treatment he's gotten. We are 50/50 bullish? I don't think so. I could care about the new housing start numbers... home buyers who live in a house can take their homes off the market til conditions are better... investors can't and won't (those adjustable/balloon payments will start to hurt). When that number drops, the number of existing homes for sale... economy or no economy, I think we're going to see big moves, with money that has no where else to go, and not very sophisticated buyers looking to funds to help them allocate. Funds have to keep 80% in the market... what's that going to do to the market? I have a surmise.... with zero evidence whatsoever except gut feeling. I think this market volatility is being manipulated somehow, to stop people out, shake out the wishywashy, before the big money comes into play. Someone else here said, "a lot of cash is sitting on the sidelines'... and I believe that. There's another thought to consider too here, if YOU had a bunch of extra money... how long would you wait on the sidelines with it for? CD & Treasures? Ties your capital up for fixed timeframes. Bonds? Comon... bonds just suck. Gold? Too volatile. How long would you wait while your money gathers mold? ETF's look good...S&P traditionally makes 10% a year on average (keep in mind what most people are told by the media and non trader friends). Mutual funds look good (great managers are making wow... 43% a year gains! "THEY know what they're doing, even if WE don't" is the thought here). When you are an average investor with a bit of cash... you going to park your $$ in 10% avg/yr index, 40+ year over year returns in a famous mutual fund, or 5% CDs stuck for 8 months or you incur penalties? Or... better yet... a 1.5% checking account. You may not be average, but what would your Aunt Thelma do? So what can happen either way? Do you think Aunt Thelma considers what happens to Mutual funds when the economic indicators are the pits? She would if she knew about it... but most retail investors don't. They do what their buddies at the office/social club/golf course do, plop it into their Lincoln, Vanguard or whatever fund everyone else plops theirs into and ride. So who is controlling this volatility? Is there liquidity? You bet there is. And at some point, it MUST come into play. We just don't know when. And you will also remember that no one paid all that much attention to the economic news during the tech 'bubble' either. With democrats coming back in probably... that's a lot of billions we'll save on war spending ... hrm. I am only surmising, and I don't know much. I'm pretty stupid actually, because I lost enough $$ in 2000 to jump out a window over, but it looks like when this churning is done...I won't bet the farm, but hrm... maybe we'll see Nasdaq 5000+.
I just mentioned in "thorns top thread" that my indicators changed after todays market action. Consider me at least a temporary bear for now.
Your technicals analysis is simply wrong. In order for a double top to be formed the support between the peaks must be broken. The dow is only 100 points off the high ..hardly a double top. With regards to indicies, FA is more accurate than TA. Companies in the past few years have been generating record profits & revenues versus 2000-2003. If anyone wants to go ahead and short my recs go ahead.
Oh... had to comment on your 5 star vs 1 star stocks... I agree. I've done that one too... those 5 stars are good values... cuz they don't do much, and a bit of bad news can kick em to the curb. On the other hand, it's still helpful to see their valuations, and they're not always off (in the legalized gambling of the stock market, what's 100%?) My best best best investment ever was GLW at $2. Morningstar gave them 1 star at the time, despite that they had poor sales, no growth... but a few billion in cash and assets at the time. That... and they were making lcd screens. If you own a computer, that's a nobrainer. I was smiling all the way to the bank when I got stopped out at $24 finally (course, it kept going to $27 back then before I stopped looking at it... despite it's meager $20.31 today). Everyone wants a few GLW's at $2... maybe that's what the cash is looking for... everyone to freak over economic indicators. Remember... we haven't STOPPED growing the economy... we just aren't growing AS MUCH. Now.... why is the news making such a big deal out of that? And for the guy who said ASIA.... the whole world's markets are tied together. They own all our debt. So, we crash, they crash. End of story. There's no non-financial quarter but real estate if the market goes bye bye... and we all know what's happening to real estate.
Huge rally day on monday, and as I said b4 this is a huuuge rally that isnt going to end anytime soon Bears getting crushed as usual cause they tend to too pesismistic for to long Dow 12,061.68 Up 75.64 (0.63%) Nasdaq 2,358.93 Up 28.14 (1.21%) S&P 500 1,374.74 Up 10.44 (0.77%) The smart money guys dont let the markets get too low. http://finance.yahoo.com/q/bc?s=^IXIC&t=3m&l=off&z=m&q=c&c= Big blue candle, a few small candles, and then BOOM giant white candle ..repeat On mondays in particular they BID IT UP and make all the shorts cover cause we are in possibly one of hte greatest rallies in a long time and there is no slowdown. The S&P will make new highs in a few months 3 months easily
The smart money guys don't let the markets get too low? You can't be for real. Where was your so called "smart money" when the nasdaq dropped from 5100 to 1116?
Smart money has changed thier game Back in 2000 everything was very overvalued, but now the opposite seems to be the case Another bubble is innevitable, and being long now will guarantee you make money.