Investing shouldn’t be about safety: it should be about calculated risk.
and…
Liquidity is not ever and always a good thing.
And I completely agree. But both of those points seem to be in conflict with a more recent post of his The Housing Speculators Return. I don’t always agree with Felix Salmon, but I typically understand his thought process. That is not necessarily the case in this post. Per Felix:
It bears repeating: homes aren’t investments, they’re places to live. If you can buy a nice house for less than you’d otherwise pay in rent, then go ahead and buy — no matter what the market looks like, or where mortgage rates are. On the other hand, if you’re looking for an “investment”, stick to securities. You can sell those much more easily when you need some money, and they won’t drive you into possible bankruptcy and homelessness if they go down rather than up.
Let me go through my grievances with that one paragraph, then I’ll detail my personal thoughts on housing more broadly.
Homes Are "Only" Places to Live
In addition to living in a home, a house can serve as a long term investment that produces income (i.e. he makes just that point with his alternative to owning… RENTING, which is just paying another homeowner for the right to live in that home).
Rent Must Be More than a Mortgage Payment to Justify Owning
This ignores the fact that rents (typically) rise, while a fixed rate mortgage payment doesn’t. BLS data shows that the cost of renting typically rises by the rate of inflation over the long run.
Thus, if you plan to live in that home for a long period of time (there were previous generations who bought to live in home the rest of one’s life), then as long as rent moves higher than a mortgage at some point in time, you may be better off (not to mention the tax benefits of writing off interest). That includes after 30 years when a homeowner no longer has a mortgage, but renters are still paying rent.
Stick to Securities When Investing
The below chart is from another post from June and shows that it wasn’t just homes that fell dramatically in value in 2008 (equities, high yield credit, ABS, etc… all fell as much or more than housing in that…
Gold, Silver and Crude Oil Continue Their Slide … while the US Dollar Attempts to Confirm a MAJOR Bottom
- Please click on any of the snapshots below to open a large, crystal-clear picture -
Disclosure: during any given session, we may trade any of these instruments bi-directionally. We are currently flat and merry into the weekend.
For similar technical takes, market calls and insights; please visit our brand new website, www.fibozachi.com. There, you can view both our complete body of analytic work as well as detailed explanations of the unique design development and technical methodologies within the proprietary technical indicator packages that we use daily to perform a comprehensive technical analysis of stocks, options, ETFs, bonds, futures and FOREX across interval periods of time, tick and volume.
In this edition of the Fibozachi Technical Update (FTU), we present you with a hodgepodge of 13 charts, which span financial markets.
Please click on any of the snapshots below to open a large, crystal-clear picture
BKX Band-Index
CL (Crude Oil Futures)
GC & DXY : Gold Futures and the Dollar Index
NASDAQ Composite & Google
S&P 500 Cash and DJIA Cash
Disclosure: during any given session, we may trade any of these instruments bi-directionally. We are currently long GCG10 (Gold Futures) and SIH10 (Silver Futures) …
For similar technical takes, market calls and insights; please visit our brand new website, www.fibozachi.com. There, you can view both our complete body of analytic work as well as detailed explanations of the unique design development and technical methodologies within the proprietary technical indicator packages that we use daily to perform a comprehensive technical analysis of stocks, options, ETFs, bonds, futures and FOREX across interval periods of time, tick and volume.
The markets have been locked in a sideways trading range. Basically we technicians call it a base being built. Look no further than the chart below.
With the market at support and forming a base, what we want to be on the look out for is stocks that have pulled back from their recent highs to support at a trendline or 50-day moving average.
Rather than go straight up, an index or stock will make a move higher, then spend some time consolidating those gains often down to an area of chart support such as its 50-day moving average and/or upward trendline, before making another move into new high ground.
When a stock pulls back to support, it’s your opportunity to buy them and take advantage of the next run. You are buying it at the point where it should find support and ideally start a new move higher. Buying at this point minimizes your risk and increases your chance to enjoy stronger profits.
The chart of BIDU is a good example of what we are looking for:
For those of you who are traders:
This issue came down to the 50 day average at 415 and proceeded to bolt to 426.46. Folk’s that is a swing traders and day traders dream — heck that was 11 points plus in just hours. Those who don’t use charts never saw it coming. Classic action.
For those of you who are investors:
As you can see, we have all of the characteristics here for a safe buy point:
1. The stock is in a clearly defined uptrend and above the 50 day average
2. The stock pulled back to support at the 50-day average which also happens to be close to additional support at the green upward trend line.
3. Full stohcastics were in oversold position (Green circle)
This is your chance to buy a leading stock at support and be in position to enjoy it’s next run higher. As long as the stock remains above the green upward trendline, it’s in an uptrend and warrants you holding your position and adding to it upon subsequent pullbacks.
To learn more, sign up for our free newsletter at www.allabouttrends.net and receive our free report — "How To Outperform 90% of Wall Street With Just $500 A Week."
The December S&P 500 index was higher due to short covering overnight as it consolidates some of this week’s decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. Closes below the reaction low crossing at 1066.90 are needed to confirm that a short-term top has been posted. If December renews this year’s rally, the 62% retracement level of the 2007-2008-decline crossing at 1217.48 is the next upside target. First resistance is last Friday’s high crossing at 1119.00. Second resistance is the 62% retracement level of the 2007-2008-decline crossing at 1217.48. First support is Wednesday’s low crossing at 1085.50. Second support is the reaction low crossing at 1066.90. The December S&P 500 Index was up 4.30 pts. at 1099.90 as of 6:01 AM CST. Overnight action sets the stage for a higher opening by the December S&P 500 index when the day session begins later this morning.
As bullish strength ebbed over the past few days, Wednesday saw the return of some buying. Volume was not spectacular but early weakness was replaced by late afternoon buying. In the case of the Nasdaq this buying engulfed Tuesday’s indecision (doji).
And buyers of the Nasdaq 100 were able to regain its 20-day MA:
Better still was the breakout in the semiconductor index which came with a break in the bearish divergence in the MACD trigger line; that potential short play mentioned yesterday is not looking so likely now.
Even the Russell 2000 could surprise tomorrow with a break from its trading range - the small doji is a handy risk:reward marker on the long side with a stop around 592.
Things are nicely poised for bulls to take advantage - but can they do so?
Markets in the short term in the US are the hunting preserves of the proprietary trading desks of the Wall Street Banks and large hedge funds. No place for amateurs.
This is a major impediment to financial reform and economic recovery because it imposes a heavy tax on the productive economy, and produces a misallocation of capital and malinvestment in unproductive financial instruments and pyramid schemes.
Both the Democrats and Republicans serve their special interests and different monetary masters, and not the public. The news presented by the financial media channels is heavily nuanced propaganda.
SP 500 December Futures
Trading range between 1080 and 1115 with uptrend intact.
Nasdaq 100 December Futures
Trading range between 1760 and 1810 with uptrend intact
US Dollar Index Continuous Contract
Still maintains the patina of a safe haven, although some of this is a natural technical reversal in the carry trade.
Gold February Futures
Correction driven by a series of heavy handed bear raids led by a group of banks that are holding undeliverable short positions.
Profit seeking sellers do not step in to a market and pound it lower with concentrated selling. Open Interest is the ‘tell.’
Please click on any of the snapshots below to open a large, crystal-clear picture
Disclosure: during any given session, we may trade any of these instruments bi-directionally. We are currently flat awaiting a multiple confluence of high-probability trading signals.
For similar technical takes, market calls and insights; please visit our brand new website, www.fibozachi.com. There, you can view both our complete body of analytic work as well as detailed explanations of the unique design development and technical methodologies within the proprietary technical indicator packages that we use daily to perform a comprehensive technical analysis of stocks, options, ETFs, bonds, futures and FOREX across interval periods of time, tick and volume.
It was a day when upward pressures on resistance gave way to increased selling. The Nasdaq gapped against bulls - enough to see a new MACD trigger ’sell’ - but not enough to see a break of 20-day MA support. To add insult to injury there was a confirmed distribution day to boot. I have redrawn resistance at 2,201 in what looks to be a double (triple?) top.
The Dow is under pressure with prices back at the lower end of its 3-week range with the 20-day MA protecting it from another 300 point drop back to its 50-day MA
The bad news for Nasdaq bulls is the loss of 20-day MA support in the Nasdaq 100. Also worrying is how prices are working closer to support than rallying up towards channel resistance.
Semiconductors failed to crack 337 resistance. Note MACD up against resistance with CCI weakening; looking like a shorting opportunity with a stop above 343.
It would appear bears have the better risk:reward options at this point - it’s not looking like Santa has much juice in the tank. Bulls should perhaps best look to the dollar to continue its run for a while.
Hope that everyone had fun at the casino today! Due to daily time constraints, we at Fibozachi will be trying out a new format: more charts, fewer words.
Please click on any of the snapshots below to open a large crystal-clear picture
As always, we hope that this quick overview is helpful. Thank you for taking the time to read our thoughts and we promise to try to find, if not make, the time to answer thoughtful questions of a decidedly technical nature.
Disclosure: we are currently long the $DXY US Dollar Index via DX futures; short GCG10 (Gold Futures); and short ESZ09 (S&P Futures). During any given session, we may trade any of these instruments bi-directionally.
For similar technical takes, market calls and insights; please visit our brand new website, www.fibozachi.com. There, you can view both our complete body of analytic work as well as detailed explanations of the unique design development and technical methodologies within the proprietary technical indicator packages that we use daily to perform a comprehensive technical analysis of stocks, options, ETFs, bonds, futures and FOREX across interval periods of time, tick and volume.
The Irish government announced draconian spending cuts of 6 billion Euros in order to stave off a debt crisis in the worst modern-day downturn in the nation’s history. Even so, Irish government bond yields have been rising relative to German government bond yields, the benchmark for the Eurozone. Over the past five years the spread had averaged about 40bps. Now it is 170b...
Last week I was a participant in the Wall Street Journal's Future of Finance Initiative in England. WSJ has written a summary of the conference highlights, and missed some key points. Allow me to fill in the blanks.
Paul Volcker, former Fed Chairman and current Chair of the President's Economic Advisory Board, made the most worthwhile comments. Moral hazard was not discussed in the open forums, so Volcker reminded the assembly...
As I always do before options expiration I reviewed our Buy List, which, this quarter, is a list of 37 stocks we've been playing since late December and, sadly, after reviewing 37 of our favorite investments very carefully this week - I could only conclude that cashing them out was the only decision I could be comfortable with this week. Of 66 trades we had on our 37 stocks, 64 are winners with an average return since 2/8 of 28% - since most of the trades were designed to make 40% for the year - it just seems silly not to take the money and run now, on March 19th.
You are not supposed to have 64 out of 66 winners in 6 weeks, you are not supposed to make 3/4 of what you anticipate for the year in 6 weeks - that is NOT how the markets are supposed to work! When the ma...
Hey all. I apologize for missing yesterday. We are back on today. Tuesday was a semi-okay day. We continued our short sale of AMD, which we got stopped out on for a 3% loss at 6.65. The sto...
Today’s tickers: EWJ, RX, UUP, DRI, IMAX, SFD & AET
EWJ - iShares MSCI Japan Index Fund – Shares of the Japan exchange-traded fund rose 0.3% today to $9.92. The roughly 125,000 contracts exchanged on the fund today is likely the work of one investor adjusting previously established positions. The trader may be unraveling a portion of a bearish risk reversal established back in late-September. It appears 62,500 puts were sold at the March 10 strike for 53 cents apiece, spread against the purchase of the same number of calls at the January 2011 12 strike for 24 cents premium each. The technically bullish direction of the risk reversal play is possibly a closing transaction given the large levels of existing open interest at each strike described above.
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(