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Source: Yardeni.com, Economagic.com

4/15/03 - S&P 500 heading higher or lower?

Last week I commented that the S&P 500 might be poised for a fall.  While it wasn't guaranteed the odds were increasing as the index fell below the upwards trendline established earlier this year.  Well, as of the close today the SPX closed at 890.81.  I believe it is extremely important to recognize that, while the market has increased in value it has not gone above the below blue trendline or exceeded the previous top in the market around 905-908.  If we get to 910 I look for the market to make a move up towards 940 or so but, for the time being, I still believe that the market is poised to fall rather than increase since economic fundamentals are poor and worsening, in my opinion.

4/13/03 - Ralph Acompora is an IDIOT! - In a recent article this week Reuters reported that Ralph Acompora, chief technical analyst at Prudential Securities,  is forecasting higher stock prices in 2003 vs. 2002.  "Gee Ralph, nice to tell us that after 1/4 of the year has already past.  Not to mention the fact that this quarter has been a nice upturn in prices. "

For those not familiar with Ralph, he has been at Prudential Securites as a technical analyst, since the late 70's or 80s.  The key element, in my opinion, is that he has never experienced a bear market like this one in his lifetime.  While he may have been accurate on the ride up he has been MISERABLE on the way down about telling people where to get out and when to buy and sell.

Ralph claims to be partly bullish on the basis of the so-called Presidential Cycle, named for what some believe is a link between stocks and the economy and U.S. elections.

According to the Stock Trader's Almanac, there hasn't been a down year in the third year of a presidential term since 1939, when Dow fell 2.9 percent. The only big decline in such a year over the past 84 years was in the Depression year 1931.

Gee, guess what?  The last time stock prices had fallen by such an enormous percentage was 1931!  If you want proof check out this chart @ lowrisk.com

4/13/03 - Housing Bubble to Fade and not bust

WASHINGTON (Reuters) - The boom times may be fading for the U.S. housing market, but activity should wind down gradually from record levels rather than ending in a bust, economists, builders and real estate agents said.

Most don't expect further drops in spectacularly low mortgage interest rates -- below 6 percent for a 30-year fixed-rate loan since the last week of 2002. Nor do market watchers expect rates to spike sharply or for the allure of home buying to dry up suddenly.

Meanwhile, mortgage financier Freddie Mac (NYSE:FRE - news) said on Wednesday (4/9/03) that U.S. home sales could surpass last year's tally if mortgage rates stay low.

"With low rates and a pickup in economic growth in the second half of 2003, home sales are expected to break last year's record pace," Freddie Mac chief economist Frank Nothaft said in statement.

DEPLETED INVENTORY

Still, some moderation is already evident in local markets, real estate agents and builders said. Pricier houses are starting to sell more slowly and listings are increasing, agents said.

"Where I live, in Denver , inventory's up 15 percent to 20 percent over the last year. But we were in a depleted inventory and now we're coming back into balance," said Daryl Jesperson, chief executive of Re/Max International, a worldwide real estate franchiser.

Sellers are putting their houses on the market for more competitive prices, said Anne Marie Clements, a real estate agent in Gaithersburg , Maryland .

"For a while, people were listing their house and they were a little bit high," she said, adding that appraisals have recently matched up more closely with asking prices. Buyers are also less willing to wait for higher offers, she added.

While some high-end homes costing more than $600,000 may stay on the market longer, and despite prices that still seem on the high side, eager buyers are keeping real estate salespeople hopping, Clements said.

"March was an extremely busy month. I'm hearing from all the agents in our office that we're very, very busy," she said. 

My comments:  Inventories of new home sales are building up and the trend is upwards (I will provide a chart sometime this week.)  It appears as though first time homeowners have been lured into the market and this was the primary thing driving up home prices in recent years.  As demand begins to weaken I expect that home prices will begin to fall as supply begins to outstrip demand.  Additionally, I believe the economy will weaken and many will be forced to sell their homes since they simply cannot afford them after states increase their tax bills.  This is just my opinion but I believe it is HIGHLY likely in the next 6-12 months.

4/5/03