Thursday, February 07, 2008


Here is the latest cover of Business Week. The editors' view of the prospects for the housing market is pretty clearly expressed in this cover. My own view is that the stock market has pretty much discounted all that is known about the current state of the housing market and its implications for credit availability and bank profits. So I think we are pretty close to the low in housing and bank stocks and that both sectors will be trading substantially higher 12 months from now.

The chart of Home Depot is particularly striking. HD established it low early in January, before the averages made their lows, and since then has rallied a greater percentage than anytime in the past year. I think this is the first harbinger of springtime in housing stocks. Note too the chart of KBE, the bank index spiders. Here too we have seen a very substantial rally with plenty of room for a successful test of the January low. I think that KBE will make it up to 50 before another significant drop can materialize.

1 comment:

Anonymous said...

hey carl
i think your right on with housing as well as banking , i mentioned the princeton model the other day and also i have been watching the housing mkt through the eyes of jims stacks bubble index he posts each week at
the overlay points to a low due with in the next month , so adding it up were coming into a low but im at odds weather the market makes a new low in terms of the dow if it does it should be in early march and the decline would be equal in terms of time as the initial drop that began in 1966
im generally bullish into augest
short term though we have a cycle low now due a bounce into feb 19th 21st and then a washout decline due into march 6th by my work
march 10th to 14th by some other work i use but is not my own and then there is the princeton model which points to march 22 .
to add to this from what i hear the banks right now are experiancing a backload of refi requests because of the bulk of resets due in march . i find it
interesting that the posts are disapearing on your blog which is also a sign that the anger is disapearing . so social mood is changing . i find your thoughts an added tool even though i do my own work , when it blends then the odds increase , overall we are on same page but from time to time we differe greatly .
keep up the good work
one thing ill add though is this
i have also noticed it apears you loose focus and get cought up in the emotions on bullish moves and forget your work , we all do this so take it as constructive critism
the princeton model calls for an upward move from march 22 2008 to
april 22 2009 . the time duration is 1.07 years and so there is a bit of error in my quote , something i indend to double check on my own . my own work calls for a low from march 6th to a high in early to mid augest , yet also
allows for a move into early to mid 2009 when compared to the 1966 lows to 1967 highs which is the present cycle i have pounded the table on for months now .
also and im still considering this
i have been following a 10 year 3 peaks domed house model which
would finally now be completing point 18 , so we still need points 19 and 20 to get through . my take is point 19 in augest 2008 a point 20 decline late in the year . and then a continuation up into april 2009 and then something more complex that will take the dow to its final point 23 peak in early to mid 2010 . there are many good
anyalsts thinking 2010 is a low
and most others are thinking same thing from a historical sence looking at my own work 2010 is a major top and not a low . even if i take into account your own version of lindsays 400 year cycles 2010 fits as a top of wave 3
going back a few hundred years .
all for now