With the stock market's vigorous bounce during the latter component subdivision of the week, the technical forcefulness of the S&P 500 sectors that I follow has improved significantly. The information below are taken from viii unlike sectors, summarizing the short-term technical forcefulness (a quantified stair out of trending behavior) of 5 highly weighted stocks inside each sector.
MATERIALS: +60
INDUSTRIAL: +100
CONSUMER DISCRETIONARY: +240
CONSUMER STAPLES: -60
ENERGY: -400
HEALTH CARE: +180
FINANCIAL: +140
TECHNOLOGY: -20
What is clear is the massive sector rotation that has occurred inward recent days. Energy stocks are similar a shot solidly inward downtrends, spell the old leaders to the downside--financial as well as consumer discretionary issues--have turned unopen to significantly.
Here are the per centum of stocks inside each sector currently trading higher upward their 50-day moving averages, providing us amongst a longer-term perspective on relative strength. Once in 1 lawsuit to a greater extent than nosotros tin laissez passer on notice come across the surprising weakness of the liberate energy stocks:
MATERIALS: 24%
INDUSTRIAL: 31%
CONSUMER DISCRETIONARY: 23%
CONSUMER STAPLES: 39%
ENERGY: 3%
HEALTH CARE: 58%
FINANCIAL: 27%
TECHNOLOGY: 34%
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Sunday, April 30, 2006
Saturday, April 29, 2006
Info!! Beneath The Housing Crisis: Variation Inward Housing Inventory
Son Macrae, shown higher upward inwards rocker incarnation, has his learner's permit, hence he took Dad for a crusade simply about hometown Naperville. We headed southwest too shortly reached formerly rural areas that are at i time the sites of multiple housing tracts. As nosotros drove, the signs for opened upward houses inwards housing developments showtime became to a greater extent than numerous, too then they became larger. Still farther to the southwest, every major intersection was overrun with the signs.
As nosotros forged ahead, the signs began offering massive discounts on the novel properties--many of which were manifestly non selling. Indeed, many of the developments were half-completed, seemingly frozen inwards place. By the fourth dimension nosotros ended our trek, nosotros came across a large sign for a evolution that offered a gratis Toyota Prius, $75,000 inwards options/upgrades, too v years of gratis utilities to anyone who would purchase i of the homes.
It was clear from our crusade that at that spot is no unmarried housing crisis. Much of Naperville existent estate is inwards slow-down mode: prices are holding reasonably well, but taking longer, on average, to sell. In the formerly hot areas of development, however, the overexpansion is mind-boggling. Not fifty-fifty gratis cars too large rebates tin give the axe movement the inventory--particularly with the tightening of mortgage loan criteria for would-be buyers.
This is non an intensification of the slowdown inwards the full general market; it is many measure deviations from the mean. I conduct maintain pregnant doubts that many of these subdivisions are feasible at whatever price. From the pricing of the regional depository fiscal establishment stocks that conduct maintain loaned to these developers, I don't seem to last lone inwards this opinion. C'mon: are you lot going to jump inwards too purchase a domicile inwards a half-filled, half-built development, when it's non clear that the builder volition e'er last able to destination the work? Are you lot going to purchase a condo inwards a partially filled edifice too promise that the balance of the units volition sell, hence that you lot won't conduct maintain to encompass the shortfall inwards maintenance assessments?
A seat out of discussions process the housing occupation equally if it's a full general slowdown that simply requires a boost of confidence alongside homeowners, a cutting inwards mortgage rates, too mayhap some regime aid to those at opportunity of foreclosure. My crusade with Macrae suggests the opposite: this is similar tech stocks inwards early on 2000. While many sectors dorsum too then were overpriced too experienced a pregnant but normal acquit market, a host of internet-related companies were brought to marketplace position with no underlying need or value whatsoever. The bust wasn't over until many of these roundtripped to zero.
The difference, of course, with housing is that, when developments fail, contractors don't acquire paid; their suppliers aren't paid; depository fiscal establishment loans become into default; mortgage-backed securities are threatened; homeowners lose value inwards their homes; municipalities lose holding taxation income; too on too on. Just equally surviving the 2000-2003 menstruation meant staying out of the formerly hot areas, I suspect that those who acquire through the electrical flow crisis volition insulate their funds from the many areas touched past times the collapse of developments that are forced to resort to increasingly desperate discounts too come-ons.
To last sure, non all the outliers inwards the housing marketplace position are marked with large signs. When I concluding looked at the seat out of Naperville properties for sale equally a component subdivision of price--and too then compared those numbers with the average seat out of properties that sell each twelvemonth at each toll level--I establish similar large variation. Many houses were for sale inwards the $500,000 too nether categories, but non hugely to a greater extent than than the seat out that sell inwards an average year. When I looked at the homes that were selling for $1 i grand m too over, however, at that spot was half dozen years or to a greater extent than of inventory on the market. Is anyone probable to pony upward that sort of coin for what looks to last a depreciating asset? With tightening loan conditions, where are these buyers going to come upward from?
The irony is that, inwards the national system of things, Naperville is a relatively good for you lot existent estate market. But its housing problems, similar the wretched swimmer's lake, average iv feet inwards depth. How many to a greater extent than markets are similar this--or worse? My adjacent postal service volition conduct maintain a look.
RELEVANT POST:
Regional Bank Woes
.
As nosotros forged ahead, the signs began offering massive discounts on the novel properties--many of which were manifestly non selling. Indeed, many of the developments were half-completed, seemingly frozen inwards place. By the fourth dimension nosotros ended our trek, nosotros came across a large sign for a evolution that offered a gratis Toyota Prius, $75,000 inwards options/upgrades, too v years of gratis utilities to anyone who would purchase i of the homes.
It was clear from our crusade that at that spot is no unmarried housing crisis. Much of Naperville existent estate is inwards slow-down mode: prices are holding reasonably well, but taking longer, on average, to sell. In the formerly hot areas of development, however, the overexpansion is mind-boggling. Not fifty-fifty gratis cars too large rebates tin give the axe movement the inventory--particularly with the tightening of mortgage loan criteria for would-be buyers.
This is non an intensification of the slowdown inwards the full general market; it is many measure deviations from the mean. I conduct maintain pregnant doubts that many of these subdivisions are feasible at whatever price. From the pricing of the regional depository fiscal establishment stocks that conduct maintain loaned to these developers, I don't seem to last lone inwards this opinion. C'mon: are you lot going to jump inwards too purchase a domicile inwards a half-filled, half-built development, when it's non clear that the builder volition e'er last able to destination the work? Are you lot going to purchase a condo inwards a partially filled edifice too promise that the balance of the units volition sell, hence that you lot won't conduct maintain to encompass the shortfall inwards maintenance assessments?
A seat out of discussions process the housing occupation equally if it's a full general slowdown that simply requires a boost of confidence alongside homeowners, a cutting inwards mortgage rates, too mayhap some regime aid to those at opportunity of foreclosure. My crusade with Macrae suggests the opposite: this is similar tech stocks inwards early on 2000. While many sectors dorsum too then were overpriced too experienced a pregnant but normal acquit market, a host of internet-related companies were brought to marketplace position with no underlying need or value whatsoever. The bust wasn't over until many of these roundtripped to zero.
The difference, of course, with housing is that, when developments fail, contractors don't acquire paid; their suppliers aren't paid; depository fiscal establishment loans become into default; mortgage-backed securities are threatened; homeowners lose value inwards their homes; municipalities lose holding taxation income; too on too on. Just equally surviving the 2000-2003 menstruation meant staying out of the formerly hot areas, I suspect that those who acquire through the electrical flow crisis volition insulate their funds from the many areas touched past times the collapse of developments that are forced to resort to increasingly desperate discounts too come-ons.
To last sure, non all the outliers inwards the housing marketplace position are marked with large signs. When I concluding looked at the seat out of Naperville properties for sale equally a component subdivision of price--and too then compared those numbers with the average seat out of properties that sell each twelvemonth at each toll level--I establish similar large variation. Many houses were for sale inwards the $500,000 too nether categories, but non hugely to a greater extent than than the seat out that sell inwards an average year. When I looked at the homes that were selling for $1 i grand m too over, however, at that spot was half dozen years or to a greater extent than of inventory on the market. Is anyone probable to pony upward that sort of coin for what looks to last a depreciating asset? With tightening loan conditions, where are these buyers going to come upward from?
The irony is that, inwards the national system of things, Naperville is a relatively good for you lot existent estate market. But its housing problems, similar the wretched swimmer's lake, average iv feet inwards depth. How many to a greater extent than markets are similar this--or worse? My adjacent postal service volition conduct maintain a look.
RELEVANT POST:
Regional Bank Woes
.
Friday, April 28, 2006
Info!! Localized Housing Bubbles: The Distribution Of Inventory
My final post service took a hometown look at the variation inwards the distribution of troubled housing. In this post, we'll zoom outward for a national view.
Based upon population information of tiptop 100 the U.S. cities, I selected 3 pairs of rattling similar-sized cities:
* Atlanta (population 519,145) too Albuquerque (population 518,271)
* Miami (population 409,719) too Omaha (population 424,482)
* Las Vegas (population 558,880) too Louisville (population 557,789)
I too thence went to the Realtor.com site too looked upward the amount pose out of units for sale inwards each city, inwards each of 3 categories:
* Single identify unit of measurement homes
* Condominiums
* Multi-family homes
The information are charted above. Note that the amount pose out of units for sale inwards Atlanta, Miami, too Las Vegas are large multiples of the pose out for sale inwards Albuquerque, Omaha, too Louisville. As nosotros saw inwards the prior post, the formerly hottest existent estate markets are the ones amongst the greatest inventories. Those, to live on sure, are also the markets that convey seen the largest cost drops. Observe, however, that--even afterward these drops--they proceed to sport monster inventories. It is hard to imagine that the housing crisis is close an cease inwards these areas.
Also Federal Reserve annotation the differences of the distributions amid the diverse units. Condominiums incorporate good over one-half the amount inventory inwards Miami too almost a 3rd of the inventory inwards Atlanta. In Albuquerque, Omaha, too Louisville, condos are a significantly smaller portion of the inventory. It appears that condominium speculation is a practiced business office of the housing bubble, but non the whole thing. Las Vegas, for instance, merely has a glut of unmarried identify unit of measurement homes--more than 3x the pose out for sale every bit inwards Louisville.
Once again, it's the lumpiness of the data--the extreme variation--that characterizes this housing crisis. It's non that the full general housing marketplace is inwards decline. Rather, precisely about areas are soft too others are wildly overbuilt, to the signal where it is hard to come across how they volition live on sold. Are to a greater extent than than 37,000 households probable to motion into Miami--a urban heart of a piddling over 400,000 people--in the foreseeable future, peculiarly when they'd live on buying into a falling marketplace too finding it hard to instruct financing? There are many, from builders to banks, that are hoping the answer is yes. For my part, I'll cast my lot amongst Omaha.
.
Based upon population information of tiptop 100 the U.S. cities, I selected 3 pairs of rattling similar-sized cities:
* Atlanta (population 519,145) too Albuquerque (population 518,271)
* Miami (population 409,719) too Omaha (population 424,482)
* Las Vegas (population 558,880) too Louisville (population 557,789)
I too thence went to the Realtor.com site too looked upward the amount pose out of units for sale inwards each city, inwards each of 3 categories:
* Single identify unit of measurement homes
* Condominiums
* Multi-family homes
The information are charted above. Note that the amount pose out of units for sale inwards Atlanta, Miami, too Las Vegas are large multiples of the pose out for sale inwards Albuquerque, Omaha, too Louisville. As nosotros saw inwards the prior post, the formerly hottest existent estate markets are the ones amongst the greatest inventories. Those, to live on sure, are also the markets that convey seen the largest cost drops. Observe, however, that--even afterward these drops--they proceed to sport monster inventories. It is hard to imagine that the housing crisis is close an cease inwards these areas.
Also Federal Reserve annotation the differences of the distributions amid the diverse units. Condominiums incorporate good over one-half the amount inventory inwards Miami too almost a 3rd of the inventory inwards Atlanta. In Albuquerque, Omaha, too Louisville, condos are a significantly smaller portion of the inventory. It appears that condominium speculation is a practiced business office of the housing bubble, but non the whole thing. Las Vegas, for instance, merely has a glut of unmarried identify unit of measurement homes--more than 3x the pose out for sale every bit inwards Louisville.
Once again, it's the lumpiness of the data--the extreme variation--that characterizes this housing crisis. It's non that the full general housing marketplace is inwards decline. Rather, precisely about areas are soft too others are wildly overbuilt, to the signal where it is hard to come across how they volition live on sold. Are to a greater extent than than 37,000 households probable to motion into Miami--a urban heart of a piddling over 400,000 people--in the foreseeable future, peculiarly when they'd live on buying into a falling marketplace too finding it hard to instruct financing? There are many, from builders to banks, that are hoping the answer is yes. For my part, I'll cast my lot amongst Omaha.
.
Thursday, April 27, 2006
Info!! Indicator Review For 7/21
Last week's indicator review noted that the major indicators continued to hold out weak, simply had stopped weakening, peculiarly amidst the pocket-sized caps. The weakness continued into the early on purpose of this by week, expanding the number of stocks registering fresh 65-day lows (middle chart), simply non taking the Cumulative Demand/Supply Index (top chart) or the Cumulative TICK to corresponding lows. This suggested a loss of downside momentum as well as sentiment, fifty-fifty every bit the fiscal sector was selling off furiously. As I noted inwards my recent postal service indicated, we've seen considerable sector rotation these by few days, alongside the weakest sectors (financial stocks; consumer discretionary issues) benefiting nearly from the brusk covering. At the same time, release energy stocks, which had been surgical operation leaders, accept moved to the bottom of the pack thank y'all to a commodity-related selloff.
As y'all tin come across from the meridian chart, these oversold weather inwards the Demand/Supply Index accept tended to yield rallies of intermediate-term duration. So far, we're seeing lower highs during these rallies as well as lower toll lows on the declines, which is the Definition of a deport market. I am non at all convinced that we've seen the ultimate lows for this bear, simply I've every bit good learned non to acquire by the indicators when they're inwards abrupt rally agency off a severely oversold condition.
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As y'all tin come across from the meridian chart, these oversold weather inwards the Demand/Supply Index accept tended to yield rallies of intermediate-term duration. So far, we're seeing lower highs during these rallies as well as lower toll lows on the declines, which is the Definition of a deport market. I am non at all convinced that we've seen the ultimate lows for this bear, simply I've every bit good learned non to acquire by the indicators when they're inwards abrupt rally agency off a severely oversold condition.
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Info!! Second-Guessing: The Should-Have Syndrome
As somebody who plant amongst traders across a diversity of settings, I've learned to last sensitive to their self-talk: how they procedure markets together with peculiarly their ain performance. We practise non sense the footing directly; rather, nosotros actively translate events together with react to those interpretations. Our self-talk--how nosotros reverberate on the events of our lives--is the production of this interpretive process.
Our self-talk, similar our behavior, tends to last patterned. Patterns of negative self-talk lead keep been associated amongst depression; worry is mutual amid anxiety problems. Traders, equally a group, are a highly achievement-oriented group. They practise non accept losses easily. Very often, their self-talk reflects their intolerance of shortcomings.
This intolerance takes the flat of second-guessing trading decisions; the subject of traders' thinking is "should have": I should lead keep taken profits earlier; I should lead keep entered the merchandise earlier; I should lead keep traded larger; I should lead keep traded smaller. Each "should have" is an implicit self-criticism. Over time, this minute guessing takes its cost on self-confidence.
There are times when nosotros pause rules of prudent trading, together with and then it makes sense to reverberate on our mistakes together with larn from them. The "should-have syndrome", however, is oft non a sober reflection on genuine error. Rather, it is a second-guessing from a perspective of omniscience: alone an omniscient trader would lead keep known to purchase the low, sell the high, size the winners large, together with size the losers small. The second-guessing is non run of a constructive, problem-solving process. Rather, it is an aspect of frustration.
As I review the mag entries of many traders, I read i "should have" afterward another. Ironically, those traders would never desire to last second-guessed yesteryear somebody else: they would thought the "should haves" equally backseat driving at its worst. Driven yesteryear perfectionism, however, nosotros tin flame undercut our ain judgment together with lose sight of our successes.
How practise you lot translate your trading results? What is the musical note of your self-talk? Is it a musical note that builds motivation together with confidence, or i that destroys those? Much of success inwards trading lies inwards the interpretation of marketplace patterns. All of that is imperiled, however, if nosotros cannot accurately translate the results of our ain decisions.
RELATED POST:
A Technique for Preventing Frustration
.
Our self-talk, similar our behavior, tends to last patterned. Patterns of negative self-talk lead keep been associated amongst depression; worry is mutual amid anxiety problems. Traders, equally a group, are a highly achievement-oriented group. They practise non accept losses easily. Very often, their self-talk reflects their intolerance of shortcomings.
This intolerance takes the flat of second-guessing trading decisions; the subject of traders' thinking is "should have": I should lead keep taken profits earlier; I should lead keep entered the merchandise earlier; I should lead keep traded larger; I should lead keep traded smaller. Each "should have" is an implicit self-criticism. Over time, this minute guessing takes its cost on self-confidence.
There are times when nosotros pause rules of prudent trading, together with and then it makes sense to reverberate on our mistakes together with larn from them. The "should-have syndrome", however, is oft non a sober reflection on genuine error. Rather, it is a second-guessing from a perspective of omniscience: alone an omniscient trader would lead keep known to purchase the low, sell the high, size the winners large, together with size the losers small. The second-guessing is non run of a constructive, problem-solving process. Rather, it is an aspect of frustration.
As I review the mag entries of many traders, I read i "should have" afterward another. Ironically, those traders would never desire to last second-guessed yesteryear somebody else: they would thought the "should haves" equally backseat driving at its worst. Driven yesteryear perfectionism, however, nosotros tin flame undercut our ain judgment together with lose sight of our successes.
How practise you lot translate your trading results? What is the musical note of your self-talk? Is it a musical note that builds motivation together with confidence, or i that destroys those? Much of success inwards trading lies inwards the interpretation of marketplace patterns. All of that is imperiled, however, if nosotros cannot accurately translate the results of our ain decisions.
RELATED POST:
A Technique for Preventing Frustration
.
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