Just to underscore my case : Below we highlight the trading range charts of the S&P 500 and its ten major sectors. When the price trades below the green zone, it has reached extreme oversold territory and vice versa for the red zone. As shown, the S&P 500 is trading well below the green zone, but it also broke below the August and November lows, signifying a shift from a range bound market to a downward trending market. Some sectors look like death while some look great. Financials and Consumer Discretionary continue their downtrends, but they are trading at the bottom of their downward channels, and a bounce to the top of their channels should come soon. Unfortunately, Industrials and Technology recently broke key support levels, but they remain very oversold as well. On the positive side, Energy, Consumer Staples and Utilities look great. http://bespokeinvest.typepad.com/bespoke/
great idea. Buy some of the financials today. Therefore, you will be long right before earnings. Maybe you'll score big, and maybe you'll go broke. Wait and see.
As you know stock market is the game of possibilities and probabilites. As the question of earninings, all bad news are almost in. So risk and reward ratio is better here. Unless we get surprise earnings in downside from big financials, it looks better in long side. Just 5 cents
AS as you know channel support holds until it doesn't. Pull up same chart for '87 and '01. Might be worth throwing an option strategy at with tight and defined risk. About CFC : At the end of 2007, more than 7 percent of payments in the company's $1.5 trillion servicing portfolio were more than 60 days overdue. http://www.bloomberg.com/apps/news?pid=20601087&sid=ay8OUcTZ01RM&refer=home That is an incredibly high % on a substantial portfolio and doubt it is restriced to CFC. With the resets coming this year don't know how it will get better. Here in MA we have just had another record month of foreclosures. They may bounce but thats all, we are still at a relatively early stage of the bear in the financials. Look at this chart, catch a falling knife anyone? Looks like it is about to go parabolic! http://countrywide-foreclosures.blogspot.com/ One last point. I have been tracking foreclosure property prices in MA and the avergae price has been rising. This in an environment where prices on properties are being slashed weekly. What this suggest to me is that the problem is spreading beyond your typical low income low property value subprtime neighbourhood and is starting to hit further up the income ladder, a very bad sign becasue these people make up a greater part of US discretionary spending. Consumer confidence numbers and spike in CC debt would seem to support this contention. In plain english having the RE crisis reach up in the middle and upper middle class bodes very badly for consumer spending making a recession far more likely given that consumer spending accounts for 71% of GDP.
Wow, was just checking the llist in MA. In the last week seeing some of the biggest drops in asking prices I have seen since I started monitoring about a year ago. Examples are from 313 to 219, 369 to 289, 235 to 186! Looks like they are really hurting for cash, not sure how the BAC stock deal is going to help them. BAC probably figures their stock is going to tank so many as well use it now and save the cash they have for the coming losses.
real estate has just started getting hit hard,prices are still obscene for shoebox junk that was bid sky high during bubble mania...realeastate will be getting slaughtered for the next 2 years or so...I dont see how there will be much of a bounce in financials while there is an ongoing massacre in RE...it may flatline at best i think or drop even more....Its too early to expect a bottom...