Though large cap indexes have been flirting with bull market highs, we continue to see relative weakness among homebuilder (top chart; XHB); banking (middle chart; $BKX); and regional bank (bottom chart; KRE) stocks.
Although Friday's job numbers were encouraging and led to talk of economic recovery in 2010, the financial and housing markets seem to be telling a different story.
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4 comments:
I wonder why people use the terrible quality BLS numbers when the much higher quality TrimTabs / income tax receipts data is available (and shows continued large job losses, which is what we should except given the crushing debt levels weighing on the consumer).
The notion that there is some kind of "recovery" going on -- especially with the banks -- is a complete and total joke. The neighbor across the street in my tiny development has abandoned his (formerly) $600,000 home to the banks and downsized to a $200,000 house (yes, the FedGov gave him another mortgage, yay!) Meanwhile the bank has not taken title to the house and (no doubt) is carrying it on the books at $600K (when nobody would pay $350K for it in this market). And the banks lie their tails off about how they are making "record profits".
This country is in deep you-know-what. . .
Matt C how exactly is your multi paragraph analysis useful or relevant on a site focusing on trading. Where do I put my stop, how big of a position am I supposed to take, based on your observation should I be long or short and exactly in which market?
Zircon,
Keeping the macro picture in mind is always a good idea.
I daytrade however I am also a long-term investor -- in stocks 100% from 2002 through mid 2007 when I went to 50% cash in my retirement accounts (100% by May 2008).
I suspect other people here are in the same boat, and think it is worthwhile discussing the longer-term picture so people don't get suckered by the dishonesty and lies going on in the markets right now regarding year+ investment decisions.
As far as offering short-term trading suggestions, I'd be happy to IM them to you free of charge in realtime if you like (I go in and out of the ES short/long many times a day). My email is mcromer at gmail dot com, let me know if you are interested.
When I had more time I wrote a blog outlining the kinds of trades I was making every day over a period of several months -- my strategies have changed somewhat but you might still find it of interest. It's available here if you are interested .
zircon,
Matt's analysis is perfectly clear to me.
Short the banks, immediately.
No hard stop required.
Position size - sell the farm and leverage to max.
David :-)
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