Would you base any decision on three-month old information? I doubt you would. So why should three-month old data about home prices matter to the market? The S&P Case Shiller Home Price Index may have been useful three months ago, but today, it's just obsolete. There are other data points to look toward for a more relevant reporting of home prices. In this case, though, looking at just one month fresher information, we get the same message. Home prices are declining. However, I believe it is part of the healthy process of real estate market normalization, and not due to any economic or sector issue. I think that home prices are finding traction at a level from which they can rise at a sustainable and modest pace.
With all due respect to Professor Shiller, who has produced plenty of significant work and is a relevant voice for markets to listen
They don't ring bells at tops, and one rarely hears the bullet coming....so they say.
Here is a short list of why I am highly defensive, right now, and recommend others do so and raise cash before the fall arrives.
It's all about the internal indicators, the weak foundation of the current rally.
1. Divergences. Although the Nasdaq continues to power higher and the SPX celebrates breaking the 2000 barrier, small cap stocks (NYSEARCA:IWM) continue to substantially lag. The rally -- continues to narrow in breadth and in new 52 week highs.
2. Treasury bonds continue to substantially outperform junk bonds, which are also lagging the SPX, a divergence. The yield curve continues to flatten, with long bonds greatly outperforming 5 year instruments.
3. Commodities are starting to sell off, hard, particularly oil, very interesting during a time of substantial Mideast uncertainty. Both this and the bond trends put into
Housing stock traders just got a gift, and as any good mannered investor knows, it's rude to reject a gift. Data reported this morning on the market for newly constructed homes offered a result that was interpreted by the market as contradictory to the positive message received last week. This is a gift for housing stock interests, at least for a near-term opportunity I see availing itself over the next month to three months. I see opportunity to buy well-capitalized and land stocked builders here, or for an easier to effect investment, just buy the SPDR Homebuilders ETF (NYSE: XHB). We can give thanks to Janet Yellen's reprieve issued last week for the catalyst, and capital seeking opportune advantage as the driver.
New Home Sales reported this morning for the month of July came in short of expectations. The annual pace of sales was reported to be running at