Wednesday, September 5, 2007

Financials, Real Estate and Retailers.

The Dow Jones US Financials above tells a story that to me seems quite clear and that story is down. I will leave analysis of the how and why to others but the tape here spells bad news, bad earnings, etc. Bad, bad, bad. the news will conform to this tape, mark my words.

The financial spiders known as the XLF above shows the picture via a traded vehicle, which I prefer. Torrential volume comes in on the downside with only tepid volume at best on the up days. Just a consolidation before the next downside storm.

The Dow Jones US Real Estate above is in downtrend until proven otherwise. Even if the inverted head and shoulders comes to fruition it will be contained by the 200day.

The real estate Ishares above again show the picture via a traded vehicle with volume. Still in a downtrend until 78 is eclipsed with some conviction (volume).

The Dow Jones US Retailers above is in a downtrend and looks very weak.

JC Penny although not a bellwether by mainstream measures serves me as a decent middle of the road proxy. The bear flag forming is ominous as it is forming on a support trend line.

Just a few short weeks ago all you could hear from the market and political pundits that be, was how strong and resilient the economy was. Now a few short weeks later everything has changed to the extent that we need rate cuts. Not just the garden variety 1/4 point type but the 1/2 to 3/4 type. Who is fooling who here and why are you still listening to these people. They tell you inflation is contained yet all you need to do is venture out your door and prices are rising. Fuel, food, travel, entertainment, oops gotta calculate that ex food and energy, what a crock of you know what! Again I ask, why are you listening to them. These are the same people that told you the tech bubble was not a bubble, that it was different this time and you were stupid to not participate. These are the same people (Greenspan) who told people to take neg-am adjustable rate mortgages at generational lows in interest rates.

It is time to wake up and look around and see for yourself what is happening. You are your own best analyst, do your own homework, do not rely on these charlatans they drag on television to tell you all is well. Baron Rothschild was quoted as saying "I buy when there is blood running in the streets of Paris" Well, we are not even close to seeing blood in the street no matter what Cramer screams. This is just the opening act so if you can't stomach what has just transpired might I suggest the safety of short duration U.S. treasuries or the treasuries of your northern neighbor of Canada. Contrary to what the biased pundits tell you, YOU DO NOT HAVE TO BE IN MARKET, cash is, was and always will be an investment decision. The buy and hold crowd will try to convince you you are but going to cash does not in any way mean you are stupid. To the contrary, it is a compliment. Good trading to you all.

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