Friday, September 19, 2014

High Homebuilder Confidence Marks The Top

Although I never put much credibility in the Government’s housing starts report because the data collection is poor and the data that is collected is put through the Government’s statistics manipulation meat-grinder, today showed a stunning decline in housing starts vs. last month and vs. expectations.  The high volatility last month and this month was due to “reported” starts in apartment buildings.  The last time apartment starts reached a very high level was in 2005 – right before the housing bubble burst.
And yesterday much ado was made about the National Association of Homebuilders Confidence Index report.  It’s reached a level not seen since, well – 2005.  I put together this graphic below which happens to show what happens to housing starts and new home sales when homebuilder “confidence” spikes up like it showed in yesterday’s report (click on graph to enlarge):
As you can see, the last several times builder confidence spiked up, housing starts and new home sales fell off a cliff (2005, 1994 and 1990).  I remember the 1990′s housing market well because I was trading homebuilder junk bonds on Wall Street.  All of them were the junk bonds of the same homebuilders around today who nearly went bust in the late 1980′s and in 2008. (more)
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Coca-Cola Enterprises Inc (NYSE: CCE)

Coca-Cola Enterprises, Inc. produces, distributes, and markets nonalcoholic beverages. It provides still and sparkling waters, flavored waters, juice and juice drinks, sports drinks, energy drinks, teas, and coffees. The company offers its products primarily under Coca-Cola, Diet Coke/Coke Light, Fanta, Coca-Cola Zero, Capri-Sun, Schweppes, Sprite, Chaudfontaine, Minute Maid, Oasis, Dr. Pepper, Monster, Nalu, Relentless, and POWERade Energy brands. It distributes its products through retailers, wholesalers, and other customers; and through licensed territory agreements in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, and Sweden.
Take a look at the 1-year chart of Coca-Cola (NYSE: CCE) with the added notations:
1-year chart of Coca-Cola (NYSE: CCE)
After rallying into March, CCE has held a very important level of support at $44 (purple) for most of the following 6 months. No matter what the market has done during that time, CCE has always found support at that level when tested. Now, the stock seems to be approaching $44 again and that could provide another bounce higher.

The Tale of the Tape: CCE has a key level of support at $44. A trader could enter a long position at $44 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.
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OPEC Hints It May Act To Stop Oil Price Slide

by Nick Cunningham
Oil Price

Oil prices may have gone as low as OPEC is willing to tolerate.
After several months of price declines, the secretary-general of the Organization of Petroleum Exporting Countries (OPEC) says the group may cut its production target for 2015 because of an abundance of supply.
The oil cartel accounts for around 40 percent of the world’s oil supply, and although its influence has diminished in recent years as oil output has risen — from the United States in particular — the organization can still significantly impact the price of crude if it wants to.
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Gold Losing Ground in Other Assorted Currencies

Some of the long time readers will know that I like to check the charts for gold, when priced in terms of the other major currencies, to get a sense of how the metal is doing when viewed from outside of this country. Since it is an internationally traded commodity, it makes sense to compare its performance to see whether there is a general global trend in the metal or whether it is diverging from such a trend depending on which currency it might be priced in. This helps us assess overall global sentiment.

With the big Scotland vote in the headlines, I thought it might behoove us to see how the metal was faring in terms of the British Pound. I understand that more than a few Scots fear for their life’s savings and were pulling money out of banks just in case. One would think that gold would be a likely recipient for some of that cash.

However, in looking at the price chart, it is rather lackluster ( and that is trying to be kind) as the metal has actually BEEN FALLING ahead of the vote. Not exactly a VOTE of confidence ( sorry, I could not resist the pun) in the metal from what I can see on the chart at this point.

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