Tuesday, July 10, 2007

A chart to burn into your Memory

The chart that I am referring to (top lower) is an overlay of the NAHB housing market index and the S&P 500. I think it speaks volumes about the relationship of housing and its importance to the U.S. economy. I have read reports that indicate the housing industry is responsible for approximately 40-45% of all job creation in the U.S. This is why the deteriorating housing sector spells TROUBLE for the economy and the stock market. Messrs. Greenspan, Bernanke, Paulson et.al have no clue where the bottom is in the housing market. They could actually be worse than former NAR president David Lereah a.k.a. Pinocchio. The chart shows quite clearly how tightly woven the housing market and the stock market are. To ignore this would seem to me as, how shall I say, detrimental to your financial well being ! Please remember this chart whenever your broker calls telling you to buy the market. He wants you to fight the last battle.

After looking at the above chart,(gravol or dramamine highly recommended) you can start to understand why every Wall St. prognosticators, CNBC talking head, and Fed bigwigs have been so quick to repeat the mantra that sub prime issues are contained. If they are so contained, why the repetition. My grandfather told me you don't have to worry when someone calls you a bastard if you aren't one! The point here is the vehement denials, to me, says more about the state of sub prime and housing than anything else.
While on the topic of housing the hommies as they are called ($HGX) are making new lows today and the 180 area should be the next stop. Lots of "INVESTORS" in this one.

Don't look now but the Yen is drifting higher and bumping up against 82 again. With some better than average volume on the FXY and fabulous volume on the Sept Yen futures (chart above) contract (109,000 contracts). Good luck and good trading to you.

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