Internals continue to improve from oversold conditions but a
pause is likely. NASDAQ improvement suggests that after some digestion (backing
and filling), a summer rally can work higher. As such, expect choppy trade.
Improving internals suggest an upside resolution of the trading range.
Advancers-Decliners with Volume 2x 21-day MA
click for larger graphic
The 10-day average (blue line) of the net above average
volume advancers (above average volume stocks trading up minus those trading
down) has moved back above the zero line suggesting that more stocks are
trading up on big volume than down – this is a positive change in a conditional
Quote of the Day:
“Every time everyone is talking about something, that is the time to
UPDATE: The original version of this is still available on Real Money (subscription only). The 2005 article details was a pushback against the gloomers predicting a Nasdaq like collapse in RE prices. Instead, we detailed why this was a CREDIT (not a HOUSING) Bubble, and that while we should expect a 25-35% peak to trough drop in prices, it would not be a Nasdaq like 80% debacle. (35% was bad enough). We also noted that an extended period of high unemployment might make those numbers even worse.
In writing it, I decided to forget everything I thought I knew, and look at housing from scratch. Consider the factors that make Real Estate very different than stocks. Lose the assumptions, check out the numbers driving Real Estate, and see if Housing is truly the bubble everyone claims it to be.
Turns out there’s much less of a bubble than commonly believed by many people believe. While anecdotal evidence of regional excesses are interesting,
they doesn’t mean we are about to see home prices get cut in half (or worse) over the next few years.
There are three key drivers hardly discussed by pundits opining on the U.S. housing market “bubble”:
1) Purchase prices don’t matter to buyers — monthly payments do;
2) US has the fastest growing population of industrialized nations;
3) “Only 3% of all buyers sell their home in a year or less,” a survey found.
These issues, taken together, suggest that while Real Estate may be an extended asset class (i.e., two standard price deviations above historical trend) that doesn’t maeke it a bubble.
Of course, its interesting to note that a Playboy bunny gave up her modeling career to go into real estate speculation (mentioned previously here), it doesn’t mean the end is nigh.
Now if I can only figure out how these columns end up at Yahoo . . .
Don’t Buy Housing Bubble Propaganda
RealMoney by TheStreet.com, Thursday May 26, 2:04 pm ET
UPDATE June 12, 2006 9:39am
I just noticed that the Yahoo page expired; The full RM article is after the jump . . .
Category: Real Estate
StockCharts.com’s Chief Technical Analyst, John Murphy, has created another set of trading rules: “Ten Laws of Technical Trading:” “Which way is the market moving? How far up or down will it go? And when will it go the other way? These are the basic concerns of the technical analyst. Behind the charts and graphs and…Read More