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davejh23 (< 20)

July 2010



New Home Sales: Worst June on Record Inspires Confidence, Stocks Surge

July 26, 2010 – Comments (2)

The new home sales report was a disaster, but it appears that investors are happy.  The media is reporting that June saw the largest month over month gain in new home sales ever.  Of course, downward revisions to April and May figures were huge, and you can be sure that June figures will be revised downwards over the next couple months.  Even as is, June was still the second worst month on record.  There's a chance that the revisions over the next two months could make it THE worst month on record.  In addition, the June report showed that new home prices are still falling.  How does this inspire confidence?  Every report lately seems to come in above estimates, and then revisions below those estimates are buried in the following month's reports.  Does anybody actually believe that this is anything but a blatant attempt to hide the truth?  The surge in optimism over the last month on the back of unbelievably dismal macro news is amazing.  [more]



S&P Headed to 1,000 Over Next 2 Weeks? 666 Over Next 2 Years?

July 16, 2010 – Comments (0)

Over the last three months, there have been three big down days that kicked off ~8% declines in the S&P.  A sharp decline here would be the first since the recent "death cross".  In 2000, the decline immediately following the death cross led to a 40%+ decline.  In 2004 and 2006, there were no sharp moves lower, and the spread between the 50 day and 200 day never widened...the crosses were reversed within a couple weeks.  In late 2007, the decline immediately following the death cross led to a 50%+ decline.  Any prolonged market weakness here could lead to a test of last year's lows within the next couple years.  [more]



Tax Receipts Are Still Falling...

July 13, 2010 – Comments (2)

To date, 2010 Federal individual income tax collections are running 4.4% lower than 2009 collections.  In addition, the personal savings rate has increased during the same time period.    [more]



Is AA Overvalued? YES!

July 12, 2010 – Comments (4) | RELATED TICKERS: AA

Based on Q2 earnings, and expectations for the full year, I would say that AA is at least 20% overvalued.  However, analysts expect AA to increase revenues by 10% from 2010 to 2011 and to somehow increase EPS by almost 100%, so maybe it's a bargain?...I don't think so.  EPS estimates for Q2, Q3, and all of 2010 were cut by 48%, 29%, and 25% respectively just in the last 90 this report really should have been a MASSIVE MISS...couldn't kick of earnings season with dismal news, could we?  Even with the stock down 20%+ over the last 90 days, the stock still looks overpriced...of course, it's up about 3% in after-hours trading.  [more]



Is the Worst Over for Stocks?

July 12, 2010 – Comments (0)

I've seen several articles this morning that ask this question, and all of them declare that stocks are set to continue their climb higher.  If earnings reports are mostly good and guidance looks good, I'd say that might be a safe bet, but that's a big "IF".  Just looking at recent price movement, stocks still look to be in a bearish trend...lower highs, lower lows.  On the S&P 500, we're still about 4% shy of recent highs.  If the pattern over the last few months continues, we could see a short term high right about now and sub-1000 within a few weeks.  If we get a stretch of down days at this point the 50 day will move well below the 200 day.  In 2004 and 2006, we saw the 50 day move below the 200 day, but we didn't see sharp moves lower, and within a couple months the cross reversed and the market climbed higher.  In 2000 and 2007, we saw sharp moves lower and quickly saw much larger spreads between the 50 and 200 day averages...both led to 40%+ declines in the market.    [more]



Buyer Beware...Double-Dip Almost Guaranteed

July 09, 2010 – Comments (14)

The ECRI index continues to tank.  Today we learned that the index fell to -8.3%.  In the past, when the index has fallen to -10%, a recession has followed 100% of the time...we could see -10% by the end of July.  I believe there have only been two instances where the index has fallen to ~-7% when a recession didn't follow.  In 2007, the recession began three months after this indicator turned negative, so there's a good chance that the economy is already contracting...especially considering all the other dismal news we've seen recently.  Given the fact that economists have been proclaiming a near 0% chance of a double-dip, a negative GDP figure later this year will likely crush stocks.  Unless most upcoming earnings reports suprise to the upside, I'd bet on an accelerating decline in stocks starting soon.    [more]



Consumer Borrowing Still Falling...

July 08, 2010 – Comments (8)

Earlier in the week, we saw articles claiming that consumer spending was up.  Despite recent declines in consumer sentiment, some journalists were declaring that the consumer is back...PHEW!...with all the bad news recently, it was looking like a double dip was almost guaranteed.  Who cares that sentiment is down, retail numbers are down, tax receipts are down, etc...?  It seems mathematically impossible that spending could actually be up, but let's just ignore logic.    [more]

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