New Developments Threaten To Burst China’s Staggering Housing Bubble
…bubbles can last for a long time. Are there indications that this
market may have peaked? Two key economic developments point to rising
risks to this multi-year housing rally.
1. Real rates on deposits have turned positive in China recently,
which will reduce incentives to use property markets as a savings tool.
If rich savers make more on interest than they lose to inflation, they
are less inclined to look for alternatives to bank deposits.
2. The recent madness in China’s money markets and PBoC’s “delayed reaction” to tight monetary conditions (see discussion)
could potentially spill over into the broader credit markets, resulting
in increased lending rates and tighter credit conditions in general.
That’s not great news for property markets. (more)
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Monday, July 1, 2013
PulteGroup, Inc. (NYSE: PHM)
Pulte Group, Inc., through its subsidiaries, engages in homebuilding
and financial services businesses primarily in the United States. The
company's Homebuilding segment is involved in the acquisition and
development of land primarily for residential purposes within the United
States; and the construction of housing on such lands. This segment
offers various home designs, including single-family detached,
townhouses, condominiums, and duplexes under the Pulte Homes, Del Webb,
and Centex names. As of December 31, 2012, this segment had
approximately 670 active communities. Its Financial Services segment
engages in mortgage banking and title operations. This segment arranges
financing through the origination of mortgage loans primarily for
homebuyers; sells such loans and related servicing rights; and provides
title insurance policies as an agent, as well as examination and closing
services to homebuyers.
Please take a look at the 1-year chart of PHM (Pulte Group, Inc.) below with my added notations:
PHM has been holding a very important level of support at $18 (blue)
since the end of February. No matter what the overall stock market has
done over that period of time, the stock has held that level of $18,
which was also a key resistance back in October and November. The stock
approaching $18 again should provide another bounce higher, but if the
overall market continues to sell-off, PHM could finally break that
support.
The Tale of the Tape: PHM has a very good level of support at $18. A trader could enter a long position at $18 with a stop placed under the level. If the stock were to break below the support, a short position would be recommended instead.
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Please take a look at the 1-year chart of PHM (Pulte Group, Inc.) below with my added notations:
PHM has been holding a very important level of support at $18 (blue)
since the end of February. No matter what the overall stock market has
done over that period of time, the stock has held that level of $18,
which was also a key resistance back in October and November. The stock
approaching $18 again should provide another bounce higher, but if the
overall market continues to sell-off, PHM could finally break that
support.The Tale of the Tape: PHM has a very good level of support at $18. A trader could enter a long position at $18 with a stop placed under the level. If the stock were to break below the support, a short position would be recommended instead.
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3 Personal Financial Planning Tips for Crashing Markets
There's nothing scarier than a crashing stock market to make you
second-guess whether you've done enough personal financial planning to
make it through what could be tough times ahead.
But by keeping a few simple tips in mind, you can ensure that no matter
what happens in the markets in the days and weeks to come, you'll be
comfortable that your financial plan will ultimately bring you success
in reaching the goals you've set for yourself.
Theory vs. reality
It's all well and good during a bull market to think hypothetically about what you'd do if the stock market dropped dramatically. In fact, many investors explicitly wanted a correction like the one we've seen over the past month or so, hoping that a pullback would let them buy once-soaring stocks at somewhat cheaper prices.
Yet, when the correction actually comes, it can be a lot harder to follow through on the plans you made during calmer times. In the past two days, the Dow has fallen more than 550 points, with today's 354-point drop marking the worst day for the market since November 2011. Suddenly, the explanations for why stocks are dropping seem like they could continue to drag the market far lower, making stock purchases seem premature. (more)
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Theory vs. reality
It's all well and good during a bull market to think hypothetically about what you'd do if the stock market dropped dramatically. In fact, many investors explicitly wanted a correction like the one we've seen over the past month or so, hoping that a pullback would let them buy once-soaring stocks at somewhat cheaper prices.
Yet, when the correction actually comes, it can be a lot harder to follow through on the plans you made during calmer times. In the past two days, the Dow has fallen more than 550 points, with today's 354-point drop marking the worst day for the market since November 2011. Suddenly, the explanations for why stocks are dropping seem like they could continue to drag the market far lower, making stock purchases seem premature. (more)
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ATW: Best Way to Play the Gulf ‘Gold Rush’
Driven by sustainable high crude oil prices, new lease agreements and successful exploration missions, activity in the industry is flourishing.
And the government is becoming one of the region’s biggest proponents.
As a part of its strategy to decrease foreign oil imports 30% by 2020, the Feds are opening up the western and central regions of the Gulf of Mexico for auction. As a result, a mini gold rush effect has occurred among drillers. (more)
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Long or Short Stocks ?
Stocks managed their third session higher as of Thursday June 27th
and its too late to jump onto that move. Major indexes and leading
stocks have rebounded into resistance along with a few key moving
averages. The next 1-3 days favor a pause or pullback at the least
simply because of the selling momentum and multiple resistance levels
being tested. It is only natural for traders and investors to pull some
money off the table or short at these levels.
Stepping back seven days and looking at the overall stock market we have seen a substantial drop in prices across the board. A Ton of stocks have formed their first impulse thrust to the downside which is typically what happens when a stock market is in a topping process (Stage 3 Distribution). The type of damage we had cannot be fixed overnight. This will be a process if it is to resolve to the upside and price action will remain wild (volatile).
The odds from a technical analysis stand point using Price, Momentum, Cycles, Volume and Moving Averages point to lower prices still to come. Actually they point to another 5% drop from the current level.
Major Points to Be Aware Of:
1. 20 Simple Moving Average is crossing below the 50SMA. Last time this took place it triggered a 5% drop in the SP500.
2. Price has bounced for three consecutive days. This typically puts the odds in favor for a pullback.
3. Price bounced and hit it’s head on the 20 and 50 moving averages on Thursday (RESISTANCE).
4. Market Time Cycles are in a decline phase meaning there will be a negative bias and seller will be actively pulling price lower on bounces.
5. Major Long Term Chart looks favorable for a bear market to start which may last 12 months. If so this is just the beginning of some scary yet highly profitable potential trades in the coming year. Stocks fall 3-7 times faster than they rise…
Daily SP500 Trend & Analysis Chart:
Long Term SP500 Trend Chart:
BEARISH SP500 Price & Volume – 60 Minute Intraday Chart:
Looking at these charts from a long term, intermediate and short term basis the odds are favoring lower prices. Being short stocks or buying inverse ETF’s is the current play for the market. But analysis and trends are subject to change depending on price and volume action each week. Do not get your heart set on the BIG picture outlook of a yearlong selloff. That could prove to be dangerous. We take this market one bar or candlestick at a time and trade based on current short term analysis.
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Stepping back seven days and looking at the overall stock market we have seen a substantial drop in prices across the board. A Ton of stocks have formed their first impulse thrust to the downside which is typically what happens when a stock market is in a topping process (Stage 3 Distribution). The type of damage we had cannot be fixed overnight. This will be a process if it is to resolve to the upside and price action will remain wild (volatile).
The odds from a technical analysis stand point using Price, Momentum, Cycles, Volume and Moving Averages point to lower prices still to come. Actually they point to another 5% drop from the current level.
Major Points to Be Aware Of:
1. 20 Simple Moving Average is crossing below the 50SMA. Last time this took place it triggered a 5% drop in the SP500.
2. Price has bounced for three consecutive days. This typically puts the odds in favor for a pullback.
3. Price bounced and hit it’s head on the 20 and 50 moving averages on Thursday (RESISTANCE).
4. Market Time Cycles are in a decline phase meaning there will be a negative bias and seller will be actively pulling price lower on bounces.
5. Major Long Term Chart looks favorable for a bear market to start which may last 12 months. If so this is just the beginning of some scary yet highly profitable potential trades in the coming year. Stocks fall 3-7 times faster than they rise…
Daily SP500 Trend & Analysis Chart:
Long Term SP500 Trend Chart:
BEARISH SP500 Price & Volume – 60 Minute Intraday Chart:
Looking at these charts from a long term, intermediate and short term basis the odds are favoring lower prices. Being short stocks or buying inverse ETF’s is the current play for the market. But analysis and trends are subject to change depending on price and volume action each week. Do not get your heart set on the BIG picture outlook of a yearlong selloff. That could prove to be dangerous. We take this market one bar or candlestick at a time and trade based on current short term analysis.
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US Weekly economic Calendar
| time (et) | report | period | Actual | CONSENSUS forecast |
previous |
|---|---|---|---|---|---|
| MONDAY, JULY 1 | |||||
| 8:58 am | Markit PMI | June | -- | 52.2 | |
| 10 am | ISM | June | 50.6% | 49.0% | |
| 10 am | Construction spending | May | 0.8% | 0.4% | |
| TUESDAY, JULY 2 | |||||
| 10 am | Factory orders | May | 1.9% | 1.0% | |
| TBA | Motor vehicle sales | June | 15.4 mln | 15.3 mln | |
| WEDNESDAY, JULY 3 | |||||
| 8:15 am | ADP employment | June | -- | 136,000 | |
| 8:30 am | Weekly jobless claims | 6-29 | 350,000 | 346,000 | |
| 8:30 am | Trade deficit | May | -$40.2 bln | -$40.3 bln | |
| 10 am | ISM nonmanufacturing | June | 54.2% | 53.7% | |
| THURSDAY, JULY 4 | |||||
| Independence
Day None scheduled |
|||||
| FRIDAY, JULY 5 | |||||
| 8:30 am | Nonfarm payrolls | June | 155,000 | 175,000 | |
| 8:30 am | Unemployment rate | June | 7.6% | 7.6% | |
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