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Tuesday, February 26, 2008

SP 500 daily Feb25 patterns


Here are a few chart patterns on the 5 minute. You can correlate the breakthroughs and the volume break outs.


Trade what you see.

Yesterday it was reported that Existing Home Sales slipped 0.4% in January, and that the inventory of homes for sale edged higher, reflecting a growing imbalance between housing supply and demand. Good for buyers, not for sellers: sales of existing homes are now down 32% from the peak in autumn 2005 (New Home sales are -55% from the peak).

This morning the Producer Price Index jumped 1.0% in January on rising energy costs and posted the biggest 12-month gain in more than 26 years. Core PPI, which strips out volatile energy and food costs, was +0.4 percent, the sharpest increase since February. They were expected +.4% and +.2% respectively, so worries about inflation seem to be real - producer prices were up 7.4 percent from January of last year, the steepest climb since October 1981! Later this morning we'll see Consumer Confidence, Fed Governor Kohn speaking in New York , and the markets preparing for a $24 billion 2-yr auction tomorrow and a $14 billion 5-yr auction Thursday.

Mortgage prices were roughly unchanged before these numbers, and are currently...about the same! This is surprising, although there is some feeling that a) the market is "over-done" on the side of higher rates, and b) the continued housing weakness is bound to have more impact on the economy as time goes on (not good!). Yesterday the markets got some good news when S&P did not downgrade bond insurers MBIA or Ambac. If they had been downgraded, they would have had trouble guaranteeing debt and strip the AAA label from $1.2 trillion of insured municipal and asset-backed debt.

90 % increase in foreclosures

Repossessions rose 90 percent to 45,327 last month from the same period a year ago, RealtyTrac Inc. said today in a statement. Total foreclosure filings, which include default and auction notices as well as bank seizures, increased 57 percent. What we are seeing is the failure of home owners to make payments on their adjustable rate loans. These loans are resetting at higher rates.

The talking heads are saying this is the bottom, I see another 460 billion dollars of Adjustable loans ready to reset this year and wonder how long this next group will hold on. This is also not considering that most of these homes were purchased at the top of the market and are upside down.

Existing home sales have just fallen to their lowest level in a decade. Standard and Poor's announced that the last quarter of 2007 housing fell 8.9%. The largest single drop in 20 years.

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