11 replies to this topic

[Bob-C]

Hi everyone, new home sales were down 8.3% for August, the lowest since 2000! LOB!!!

Cheers,

Bob-C


PHM getting slammed and KBH way off the day's high and IMHO, going down too!!! LOB!!!

Edited by TTHQ Staff, 27 September 2007 - 09:19 AM.

[selecto]

Cheers back atcha, Bob

http://stockcharts.c...05134&r=748.png

[OEXCHAOS]

From Yahoo Finance:

The New Home Sales report for August was just released and it showed an 8.3% decline to an annualized rate of 795K. Economists expected a drop of 5.2%. It is important to note that the data don't include the effects of the September FOMC rate cuts

This killed me. Why is it "important to note that the data don't include the effects of the September FOMC rate cuts"?

As far as I can tell there is NO effect regardless. And why would I care about September's possible data when I'm looking at Augusts? Not that I care at all, but the obvious spin is goofy and amateurish, even for that lot.

Mark

[Bob-C]

Cheers back atcha, Bob

http://stockcharts.c...05134&r=748.png

Thanks very much selecto! Thanks also for taking the time and effort for the informative XHB chart! Good luck on your trades!

Best,

Bob

[selecto]

Actually, long rates went up, which hurts both resets and new biz.

[Bob-C]

From Yahoo Finance:

The New Home Sales report for August was just released and it showed an 8.3% decline to an annualized rate of 795K. Economists expected a drop of 5.2%. It is important to note that the data don't include the effects of the September FOMC rate cuts

This killed me. Why is it "important to note that the data don't include the effects of the September FOMC rate cuts"?

As far as I can tell there is NO effect regardless. And why would I care about September's possible data when I'm looking at Augusts? Not that I care at all, but the obvious spin is goofy and amateurish, even for that lot.

Mark

Hi Mark, thanks very much for your on-target insights.

Best,

Bob

[Doug]

U.S. Home Construction Index chart, DJUSHB, Daily


The home builders continued their descent after testing the top of the parallel down-channel on the September spike up (just like in August--bear market rallies typically look just like those two spikes). But the index could be nearing the end of their strong selloff and could consolidate for a longer period of time before heading lower again. In other words the selling may be temporarily exhausted soon. Support might be found near 340 to be followed by a larger sideways/up correction over the next month or so.

The monthly chart though shows more downside before potentially finding support:

U.S. Home Construction Index chart, DJUSHB, Monthly


The bottom of the longer term parallel down-channel is closer to 250 (also the 2002 low) so another 100 points lower (another 30% haircut). From there it could get the slightly larger sideways/up consolidation into the end of the year before finding a final low early next year just below 200 (the 2001 low). The wave pattern would then call the pullback complete and the selling in the home builders would likely be finished.

I don't think that will be the bottom in the housing market but all the bad news for the builders will have been flushed out by then. It'll probably be a long period of recovery for the builders and not necessarily a good investment (dead money for a while) but nor will it be a good short. By then we should have better shorting candidates to choose from.

Regards

[Bob-C]

U.S. Home Construction Index chart, DJUSHB, Daily


The home builders continued their descent after testing the top of the parallel down-channel on the September spike up (just like in August--bear market rallies typically look just like those two spikes). But the index could be nearing the end of their strong selloff and could consolidate for a longer period of time before heading lower again. In other words the selling may be temporarily exhausted soon. Support might be found near 340 to be followed by a larger sideways/up correction over the next month or so.

The monthly chart though shows more downside before potentially finding support:

U.S. Home Construction Index chart, DJUSHB, Monthly


The bottom of the longer term parallel down-channel is closer to 250 (also the 2002 low) so another 100 points lower (another 30% haircut). From there it could get the slightly larger sideways/up consolidation into the end of the year before finding a final low early next year just below 200 (the 2001 low). The wave pattern would then call the pullback complete and the selling in the home builders would likely be finished.

I don't think that will be the bottom in the housing market but all the bad news for the builders will have been flushed out by then. It'll probably be a long period of recovery for the builders and not necessarily a good investment (dead money for a while) but nor will it be a good short. By then we should have better shorting candidates to choose from.

Regards

Hi Doug, nice to hear from you, welcome to the board! Thanks a lot for your work on both DJUSHB charts and for your insights. Good luck on your trades.

Cheers,

Bob-C

[Drano]

When the first homebuilder declares bankruptcy the others will head down fast in sympathy. Some of these companies are not going to make it, and I'd be wary of trying to play any bounces until ALL the bad news truly is in. Even the President of Coldwell Bankers says it's going to be up to 3 years for a meaningful recovery in home sales.

[Bob-C]

When the first homebuilder declares bankruptcy the others will head down fast in sympathy. Some of these companies are not going to make it, and I'd be wary of trying to play any bounces until ALL the bad news truly is in. Even the President of Coldwell Bankers says it's going to be up to 3 years for a meaningful recovery in home sales.

Hi Drano, good to hear from you. Thanks for the excellent HB insights!

Best,

Bob