Housing Bubble-Trouble? Use
(C) 2005-2011 www.tigersoft.com
August 1, 2005 (newer Closing Power chart added at bottom)
Watch the Housing Stocks closely now.
They will Tell You When a Break is Coming.
Housing Stocks at top of price channel
WHY ELSE IS FNM SO WEAK-LOOKING,
IF THIS IS NOT A HOUSING BUBBLE ABOUT TO BREAK?
Fannie Mae is a leading indicator. And when housing stocks like Lennar, Pulte Home or
Fideility Housing break, they will likely fall very fast. And the negative repercussions
will be very broad and far-reaching.
"Trouble at Fannie Mae and Freddie Mac. They are now being forced to tighten
up sloppy lending. This means they are not going to keep buying very low-quality
loans from banks, and the total money available for buying houses is
falling. Fannie Mae recently announced a $9 billion loss and its mortgage
portfolio shrank at an annualized 16.8 percent rate in January 2005, on top of a 10.1
percent decline in December 2004." Business Week
Cynics note that booms A L W A Y S end badly in busts. Whether its the
Internet Stock Bubble of 1999-2000, Silver in 1980 at $50/ounce,
Dutch Tulips in the early 1600's, the South Sea Speculation of 1711, Florida Real Estate
Craze of 1920's, Canals, Railroad stocks, the little guy is usually the last one in, the
last out and the one who's hurt the most. To survive the pull of the passions of mass greed,
you must get out of these bubbles before the free-fall!. This takes advance preparation to
build up your knowledge, and even more, to shore up your resolve. When the
break comes, there will be no bargains, quite possibly, for years!
A recent survey showed that a whopping 23% of homes purchased in 2004
were for specualtive investment. The Economist now estimates that it would take 12 years
of flat prices to move prices back in line with historical averages.
The ZERO-DOWN, interest only loans that many speculators have used greatly increased
the volatility of the market. Just as low-margin rates made the stock market soar in the 1920s, ZERO-DOWN loans have made housing specualtion reach DANGEROUS levels. The
Bush Administration is not interested in losing favor with home owners.
Two years ago the London Economist warned:
"Housing is just as prone to irrational exuberance as is the stockmarket.
Property is increasingly viewed as an easy way to make money. People buy
a home in the expectation that its price will continue to rise strongly over time.
Such expectations lie at the heart of all bubbles. Given the boom in the property
market over the past few years, at the very least house-buyers betting on further
rapid house-price gains are likely to be disappointed. Worse, there is a risk that
house prices will take such a tumble that they take whole economies with them..."
Fannie Mae's stock (below) is no longer rising. Actually, it is now heading for a vital test of
support. The housing stocks are still rising. PHM's rise is hyperbolic. Watch them closely
for the bearish price patterns thay typically appear at major tops. Already trading volume
is not matching their price rises. This we see in the failure of Lennar's OBV (aggressive
buying volume) to make new highs as the stock price does. This is usually another early warnng
sign. Subscribe to TigerSoft's services and we'll tell you the other signs. In particular, we
recommend Tiger's 160 page Book: "SHORT SELLING: Killer Profts in Any Market"
watch the Home Builders Like Lennar (LEN) and Pulte Home (PHM)
How much higher can they go?
|Most recent articles - 8/25/2005 - Fortune magazine|
Tiger Charts of PHM and LEN show heavy Professional Selling.
We see this in the declining CLosing Power and red distribution.
This chart was added here to show how well TigerSoft calls major tops.
LENNAR -Home Building 2005