Sunday, October 15, 2006

What will housing do

Well, no one seems to know. I am bearish and thing that it will drag down the economony and we will see its effects shortly.

check out the chart on this site here. Its a good article as well. Im sure most people have seen that top chart its been around for a bit. Having seen an updated chart (have this mac and cant figure out how to rip it out of the pdf i have...) the SP has now extended up above the housing peak. In other words if you see the last SP peak on the chart we are right about there. Now the market could continue up and break the correlation - but I suspect not. Thats just a feeling.

As a side note - I covered some of my SP puts when the market was at 1366. I got smacked on that trade (and still am) and basically am covering in case the market continues to trade higher. Traders that I chat with are frusterated and no one seems to understand the strength in the market especially withso many unknowns. We now face performance anxiety where funds see the latest run up and havent participated so them must now chase the market. Its basically musical chairs and someone is going to get stuck with SP highs - unless its like 1995 where the market just kept going up.


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