Homebuilder's Sentiment Index drop

Back to the chart.

Uncanny, isn't it?

Here we are two years later, and that homebuilders sentiment chart is dead on.

saut8281.png


Scarey.
 
Keep in mind there is a 12-month lag in that chart. That leaves plenty of room for fate to intervene. D
 
This brings up an interesting question that's been on my mind since that graph was posted. If the market turned over and headed down, ultimately giving up half its value, when would you know it? ...

This is where you tell the smart money from the dumb. The herd will ride it all the way down.

Yup, I got into the I Fund on May 9 and rode it all the way down. I got out in the first week of July and have been jumping in and out since. At least I am closer to making my loss back than I would be if I just stayed in. This board really helps out in my decision making. I had an IFT request to get out of the I fund on the bottom, but Tom convinced me I should stay. Good thing I did or else I would have been way below what I am now.
 
Sounds like someone got burned once. Voice of experience??
Oh YES, how true it is. More than one time I did hang-in-there toooooooo long. Its tough not to when you are looking for a huge bounce off of a lower trend. You know what they say, "what goes down must go back up" Yeah Right!:sick:
 
Man, wouldn't it be nice to buy into the S&P at 600?

This brings up an interesting question that's been on my mind since that graph was posted. If the market turned over and headed down, ultimately giving up half its value, when would you know it? If you were fully invested at the time and were watching the daily wiggles, how would you finally decide that it was more than just "oversold" or "due for a bounce" or whatever. When would you cut your losses? Seasoned players use stops and force themselves to observe them, but if everything really looked oversold, wouldn't the temptation to stay just a little longer be awfully intense?

This is where you tell the smart money from the dumb. The herd will ride it all the way down. I've never been through a real collapse so I don't know what I would do on my own. Thanks to this board, I'll have the advice of dozens of people who know the markets far better than I.
 
Now I need to back away from the keyboard... how deep would a possible housing bubble burst ripple through the economy? I'm not buying this chart...but it makes one ponder.:confused:

I agree, interesting stuff but my gut says it's too pat. If a single correlation had that much predictive power, every talking head in the media would have been all over over it as it developed. I hope and expect we'll get the November/December rally and after that, who knows.
 
The housing index on the chart, as shown, is heading sharply down. I don't think it has bottomed; next month's number will be even worse. It won't start turning back up until the Fed starts dropping rates, so the index will decline the rest of this year. What does that say? S&P 500 at 400-500 or so a year from now?

What possible confluence of events could bring that about???

When I think about how sharply the NHBA index has dropped, my first thought is about that housing construction starts have also dropped. What are all of these construction workers going to be doing if they are no longer building houses. I think of the related job sectors like electricians, plumbers, etc... What about stores like Lowes, Home Depot, etc.

Now I need to back away from the keyboard... how deep would a possible housing bubble burst ripple through the economy? I'm not buying this chart...but it makes one ponder.:confused:
 
Hey! Don't say that too loud, Birchtree will have a heart attack!:(

I'm not going to worry about Birch. He may like to posture and pose as a perma-bull, but he is ultimately a realist and clearly understands the mechanics of selling short. If the market begins to collapse, he will make money from it.
 
The housing index on the chart, as shown, is heading sharply down. I don't think it has bottomed; next month's number will be even worse. It won't start turning back up until the Fed starts dropping rates, so the index will decline the rest of this year. What does that say? S&P 500 at 400-500 or so a year from now?

What possible confluence of events could bring that about???
Hey! Don't say that too loud, Birchtree will have a heart attack!:(
 
The housing index on the chart, as shown, is heading sharply down. I don't think it has bottomed; next month's number will be even worse. It won't start turning back up until the Fed starts dropping rates, so the index will decline the rest of this year. What does that say? S&P 500 at 400-500 or so a year from now?

What possible confluence of events could bring that about???
 
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