Tuesday, February 27, 2007
Been pretty boring until today, record NYSE volume, HUGE down day, near 99% down volume, a huge 64% SPIKE in VIX (volatility index) to over 18.
QID gained $4.50 (proshort Q's) and it doubled its normal volume!!! Previous PEAK volume day (was around 7.5 m shares) was near high for move (near end of selloff).
Is there a global liquidty short circuit? Will the Chinese follow through on RUMORS to tighten speculation, add capital gains taxes, rein in fever. Is it a rumor?
70 High cranes seen in Shanghai city alone.
BOJ raising rates, YEN higher, Dollar weaker, is US DOLLAR in trouble?
When a move in the markets is followed by VOLUME, in this case record volume, I don't think it smart to dismiss it. Instead of one day wonder could be kickoff to much larger decline. As my chart shows, a trip down to 100 wk would not surprise me, not all at once of course.
Today SELLING PRESSURE came back in a big way.
MARGIN DEBT, those stupid enough to buy stocks on CREDIT hit a NEW ALL TIME HIGH, yes higher than in bubble top of 2000 !!!!
Margin calls could beget more selling which begts more selling until it exstiguishes itself.
I expect a possible green open then reversal, then maybe another reversal, BUYERS MUST come in and soon to stem the rout, sellers will get aggresive again, get their nerve back.
Little guy did nothing today, dont get him worried.
Why guess, my moving averages show no cross, when they do the debacle will be in full swing, volatility will be back in big way and to stay for awhile.
Bull is OLD, on last legs, MANY may want to lock in gains, instead of sit around and watch it possibly whither away again like in 2000-2003. Many are in much better shape now, gaining a lot back, maybe better off.......will the little guy sit by this time around should a bear market come back?
I am in CASH my friends, I get a check each month, no risk, I felt best of bull had come and gone, so WHY risk it.
I know HARD to time short, so for most best to wait for bargains to appear, if they do, you will need CASH to buy.
Market MAY stabilize for a few days not sure, will be watching overseas markets tonight, if China etc does better, we may too.
I think this is severe warning shot, money fled to bonds yielding scant nothing.
INVERTED yield curve has been screaming trouble, Wall Street Shills said don't worry.
Durable goods PLUNGED over 7% today. Anyone suggesting housing slump isn't hurting business wake up.
LOTS of damage done today, record volume, I am not long are you? I am in preserve mode, live to fight another day.
Record volume in QID tells me NAZ selloff should level off here, but I hope today is not shortly forgotten should the PPT get us going again , not to worry, at some point you better have an exit strategy IMHO.....I mean who wants to be last there selling AGAIN at the lows......you NEED CASH to BUY, how much of your portfolio is cash?
Take care, I am hoping the world economy is not unraveling as we speak, liquidity and speculation got us here, and it can also unwind and take us down!
Friday, February 16, 2007
Thursday, February 15, 2007
Industrial production plunges
Capacity ute swan dives
NET foreign purchases disappears!!
Initial claims UP sharply
Tuesday, February 13, 2007
With HSBC and New Century Financial suffering losses from subprime borrowers, which other mortgage lenders face an unpleasant reckoning?
by Maya Roney
As investors swallowed negative news from two of the biggest players in the subprime mortgage market on Feb. 8, the "housing bottom" question took a backseat to a new debate: Who will get crushed in the subprime shakeout, and who will emerge unscathed?
The market started showing more signs of subprime jitters when HSBC Finance, the Prospect Heights (Ill.)-based consumer lending unit of British banking giant HSBC Holdings (HBC) said it was setting aside 20% more than analysts had estimated for bad loans in 2006 because of weakening in the U.S. mortgage business. Shares of the bank were off 3% early afternoon on Feb. 8.
More bad news came from Irvine (Calif.)-based lender New Century Financial (NEW). New Century, the second-largest subprime mortgage originator in the U.S., announced it would restate results for the first three quarters of 2006 to correct accounting errors related to loan repurchase losses, sending the stock down 30% on Feb. 8. The company expects to see a loss for the fourth quarter of 2006 due to early payment defaults.
Defaults Aren't the Whole Story
Shares of other big mortgage players, Countrywide Financial (CFC) and Washington Mutual (WM), were down more than 2% on Feb. 8. Smaller subprime lenders were hit even harder: Kansas City (Mo.)-based Novastar Financial (NFI) shares fell 13%, and San Diego-based Accredited Home Lenders Holding (LEND) dropped 7%.
As investors become more aware of the problems with subprime loans, lenders that focus on customers with poor credit histories will have to face the music. But it may be for different reasons than people think.
"Just because some subprimers are bad doesn't mean all are," says Stuart Plesser, a mortgage lender and insurer analyst for Standard & Poor's Equity Research. "Countrywide will suffer because they are going to face a pricing issue." Plesser has a "sell" rating on Countrywide, the No. 1 mortgage originator and fourth largest subprime mortgage originator in the U.S., according to National Mortgage News.
Many mortgage lenders, including Countrywide and New Century, sell their loans to banks and investors that are attracted to the high interest rates they carry. HSBC got into subprime during the U.S. housing market boom, but when the market began to cool and foreclosure trends accelerated, the bank found itself in trouble. Washington Mutual, another big player in the subprime market, said in January that its mortgage business lost $122 million in the fourth quarter thanks entirely to losses in its subprime segment.
"This is the leitmotif of this whole thing: These people don't really know what they are doing in mortgage banking," says Plesser. "They are writing whatever loans just to write loans, thinking they will worry about it later. But now it's later."
Regular lenders also suffer when banks get into their territory. Companies like Countrywide have been forced to price loans lower since investment banks started buying up subprime loans and pricing them aggressively. Banks assumed they were covered from potential losses by the revenue streams from their myriad other businesses.
Despite the headwinds, lenders like Countrywide, which only has 10% of its business in subprime production, could weather the housing slump better than nearly pure subprime companies, like New Century and Novastar.
"Countrywide is diversified and will start picking it up when everyone goes out of business," says Piper Jaffray analyst Bob Napoli, who has a "buy" rating on the stock. Napoli also says Accredited, though a pure subprime company, could also "get to the other side."
Diversified Against Danger
As for New Century, Napoli says that although the earnings restatement came as a surprise, he has been looking for an ugly fourth quarter from a company that "grew way too fast for their infrastructure." Still, the analyst has a "market perform" rating on New Century shares, which he says are "not yet a certain sell."
Several other analysts downgraded New Century to "sell" on the news Feb. 8, including Kenneth Bruce of Merrill Lynch (MER). "In short, we think New Century will shift to survival mode, putting shareholders at further risk," the analyst wrote in a report.
Diversification will also be the key factor in keeping banks afloat in 2007. That may be why Bear Stearns (BSC) wasn't afraid to buy the subprime loan business last October of another Irvine-based lender, ECC Capital (ECR).
"Because they are so big and [Bear Sterns has] so many businesses, it doesn't go straight to their bottom line," says Plesser. By 2008, the analyst expects many of the big banks to unload their subprime portfolios and leave the business to the regular lenders.
Let That Be a Lesson
Even if banks decide to stick with their subprime segments, HSBC's profit warning and New Century's restatement may prevent other banks from getting into it in the future. Despite the profit warning, Standard & Poor's Ratings Services affirmed its "AA" long-term and "A1" short-term credit ratings on HSBC Holdings on Feb. 8 and said the outlook for the company remains positive. "The positive outlook reflects the potential for HSBC's diversification to generate very strong group performance even when some business lines are performing weakly," wrote credit analyst Michelle Brennan.
"They are going to look really stupid for making these acquisitions," says Napoli. "Things like this remind people that it's not an easy business."
Click here to see the U.S. cities with the highest foreclosure rates. (newsweek)
MA'S rising nicely, but IMHO looks like EWT might be taking a little breather as it has on way up as my TA suggests good chance that has begun. If I decide to nibble, I will wait at least until indicators turn up as shown before.
Sunday, February 11, 2007
Thursday, February 08, 2007
Dow and Transports now in synch with new highs (9 months after Trannies first made new high w/o Dow) the NAZ 50% below previous 2000 bubble highs is LAGGING badly, even after CSCO earnings hype.
Several of my trusted subs say NO NEW HIGH IN SIGHT, uptrend should continue for "at least 4 more months".hmmmmmm
As prices rise, we need to see buying demand diminish, selling pressure must rise, new highs vs new lows must fall.
I see even now a VERY SELECTIVE rally, it hs been called a "stock pickers market".
VIX (volatility index) extremely LOW, no one buying put protection.
I am looking for interest rates to rise (10 yr) above 5%, will be initial sign of trouble IMHO.
Weren't a slew of mortgages supposed to rise this year in payments?
Early year money pump is right on schedule propping things up.
Bullish is year after mid term elections historical bullsihness.
I would abandon WEAK performers in favor of strong stocks in the strong sectors, if you feel you must be IN. IMHO
When was the LAST serious correction?
Saturday, February 03, 2007
ON THE WINGS OF A BUTTERFLY, I AM FREE
I AM FREE OF THE WORLD’S TROUBLES
I AM FREE TO FLY ABOVE ALL THE WORRIES
I AM FREE TO LEAVE THIS WORLD AND ENTER
A NEW ONE
A NEW WOLRD FREE OF STRIFE AND TURMOIL
FREE OF HATE AND INJUSTICE
FREE OF CRIME AND INPATIENCE
FREE OF THE HANDS OF TIME
ON THE WINGS OF A BUTTERFLY, I AM FREE
I AM FREE TO GO WHERE I WANT
I AM FREE OF ALL PAIN
I AM LIGHT AS A FEATHER AND HAVE NO WORRIES
ON THE WINGS OF A BUTTERFLY
I HAVE ONLY ONE REGRET IN LEAVING THIS WORLD
AND THAT IS THAT I CANNOT BE WITH YOU ANYMORE
YOU HAVE BROUGHT ME SO MUCH JOY IN MY LIFE
I HOPE YOU KNOW HOW MUCH I LOVED YOU
ON THE WINGS OF A BUTTERFLY I AM FREE,
BUT I CANNOT HAVE YOU
BUT WHAT I DO HAVE, AS DO YOU IS A LIFETIME OF MEMORIES
OF HAPPY TIMES AND OF LOVE AND JOY
I KNOW WHAT WE MEANT TO EACH OTHER
THE SADNESS AND EMPTYNESS WILL LIFT
ON THE WINGS OF A BUTTERFLY I AM LIFTED FROM MY SORROW
AND AM UPLIFTED WHEN I THINK OF YOU, OUR LIFE TOGETHER
YOU WILL BE THAT BUTTERFLY SOMEDAY,
AND I AM SURE WE WILL MEET AGAIN
HIGH ABOVE THE WORLD
WITHOUT A CARE, IN TOTAL PEACE
AND TOGETHER AGAIN.