7 replies to this topic

[Rogerdodger]

Pitbull has had a crash alert on IYR Real Estate since May 4.

Jack Chan's chart looks like there may be a heartbeat, at least for homebuilders.
It might turn out like March's pathetic bounce.
http://stockcharts.c...85302&r=479.png

[selecto]

Volume precedes price.

Although I wonder if last week's volume is entitled to a lot of weight, what with the clarks running the desks while the swells were at the beach. I think instructions may have been left to run her up.

Edited by selecto, 08 July 2007 - 09:22 PM.

[Rogerdodger]

I don't think Jack uses volume. Mostly trendlines, MAs and MACD crosses

Edited by Rogerdodger, 08 July 2007 - 09:21 PM.

[gorydog]

I don't think Jack uses volume.
Mostly trendlines, MAs and MACD crosses

I think we probe resistance at 32, then move down again. I closed my homebuilder puts thursday. I think you could play it long for a very short time while shorts cover.

GD

[jawndissedi]

I think you could play it long for a very short time while shorts cover.

GD

Vaya con dios, amigo. From today's NYTimes:

Increasing Rate of Foreclosures Upsets Atlanta
A big reason the fallout is occurring faster here is a Georgia law that permits lenders to foreclose on properties more quickly than in other states. The problems include not just people losing their homes, but also sharp declines in property values, particularly in lower-income and working-class neighborhoods.

For example, a three-bedroom house near Turner Field, where the Atlanta Braves baseball team plays, fetched a high bid late last month of $134,000 at an auction by the bank that took possession of it. Almost three years ago, the new home was bought for $330,000.

[redfoliage2]

Longer term, you will housing index HGX below 200:
http://stockcharts.com/c-sc/sc?s=$HGX...7463&r=4011

[OEXCHAOS]

For example, a three-bedroom house near Turner Field, where the Atlanta Braves baseball team plays, fetched a high bid late last month of $134,000 at an auction by the bank that took possession of it. Almost three years ago, the new home was bought for $330,000.

This always kills me. New home? So, what's the builders profit in there? $30K? $60K? (I'll need some help on that, all I know is that they don't work for free--usually .) Then there's 6.5% commission, call it $17k. Then you figure that there was stuff wrong with the home that never got fixed "under warranty" (there always is). Maybe $10k worth. Then the owner probably trashed the place or simple neglect trashed it. I've seen enough "bank owned" properties to tell you that there can be quite a bit of damage. THEN if we assume that paid up a bit to begin with AND we have a sloppy real estate market we get to that end number of $134k.

The real decline in value, however, was more like 25% (maybe less), not 66%.

I'm not saying the loss isn't real, nor that it's a sign of health, but Joe 6p's house isn't 60% down from 3 years ago either.

Now, the stocks are about as obviously Bearish as they get. They have more Bears in Cramer's poll than any other sector--by a long shot. A squeeze doesn't need good funamentals, just a hint of possible good news, or just positive price action.

I mean really, how many folks are short homebuilders? How many of them are rank amateurs? If you'd never shorted a stock before but you wanted to, would you short the homebuilders? I'll just tell you right now, late bears in this sector are sheep who have mistaken themselves for predators.

Now, would I buy any homebuilders for my clients? No way. Not for a long time. Any sector in this much trouble will have a hard time sustaining gains, but that doesn't mean that there won't be great trading gains, particularly in the bigger one's. The small one's are great shorts on any sharp bounce.

Mark

[Data]

Most of the homebuilders (CTX, HOV, RYL, DHI, etc.) recently broke down from their multi-year head-and-shoulders patterns. They have about 5 percent upside to get to their necklines. See the monthly charts for the above for clarity.