IS IT TIME TO PULL OUT THE BULL MARKET PLAYBOOK?
16 August 2009 by Cullen Roche
10 Comments
Interesting data here from Kiplingers. Their new Recovery Index identifies six important indicators that point to a weak or strong economic environment and provide some insight as to whether we are in a bull or bear market:
Identifying a turn in the economy is tricky business, especially when each day’s news seems to bring conflicting information. To cut through the noise, we’ve identified six key economic indicators. Two have turned fully positive – interest rates spreads and home sales – and when three of the six indicators go fully positive, it’s more than likely that the recession has ended. Stay tuned.
the inventory recession is over
the credit depression has not even begun….
If existing home sales are really “up,” then why are home prices, foreclosures and inventory all going the “wrong” way? Not to mention the artificial impact of the $8K tax credit…
Obviously, existing home sales are only “up” because they count the 40% to even 60% foreclosure resales the same as a routine resale. But with foreclosure resales, for every “buyer” there is another new renter –instead of a move-up buyer as was normal in past situations.
Call me when net non-foreclosure resales are up…
Regarding credit:
Aren’t banks lending to each other because we back-stopped everyone. It still seems that credit rate of change is falling – http://www.nowandfutures.com/key_stats.html#us_credit
Regarding home sales:
http://www.calculatedriskblog.com/2009/08/first-time-home-buyer-frenzy.html
“Expect a surge in existing home sales (and some new home sales) over the next few months. Expect prices at the low end to rise (simple supply and demand). Expect all kinds of reports that the bottom has been reached.
Expect the frenzy to end … “
all my friends around me are turning bullish now~~ we will see…
I don’t believe we are in a bull market, but this rally can still continue and become a really huge head fake…Honestly, just use technical analysis right now. I think that is all this market is at the moment. Fundamentalists are scratching their hands while indices and stocks are roaring above their ema’s…
The main problem with using such a system is that the indicators aren’t weighted. For instance, with consumer representing 70% of the economy you should really focus mainly on consumer spending. The others are more or less extensions of how strong the consumer is. Interest spreads are great to use, but consumers won’t borrow if they can’t spend money.
And unfortunately for the bulls, the consumer is flat on his/her back right now. It looks like back to school sales are going to be a real disaster. This market has been flying thru the eye of the storm for months now. Let’s see how strong the back half of this storm is….I have a feeling it will pack a bigger punch than investors think.
Agreed. And despite what’s known about the economy, many will still feel shocked when we re-test. Meanwhile, China keeps heading lower..Doesn’t feel like a bull market in the real economy.
Hong Kong just opened down 2.5%….
and closed 2.64% lower
I wish I’d picked up some FXP on Friday! Up 7.5% in pre-market.