Existing homes were sold in April at the fastest pace in history (seasonally adjusted rate of 7.18 million units). At the same time the median price rose 15.1% year-over-year, the largest 12-month price gain since 1980. Just more evidence that we are now comfortably in the blowoff stages of the housing boom, with even Alan Greenspan finally talking about froth and bubbles.
Exhibit One, this week’s Fortune magazine cover. The magazine covers of Business Week, Time, Fortune, Newsweek, and others have a long history of being contrary indicators of everything from stock market tops and bottoms, stock tops and bottoms, currency tops and bottoms, athlete tops, CEO tops, scandal bottoms, etc. I leave it to you to draw your own conclusions. Cheers!
Just a progress check since my May 10th posting…. Up about 18% on rising volume since then, though Thursday and Friday the momentum cooled and Friday we printed the tight red candle. Both developments and the ideas in today’s QQQQ posting suggest we could get a retracement this week. We’ll see. Cheers!
Except for the volume, things have come along pretty nicely since my May 2nd posting (Day One Rally Attempt). Going into Memorial Day weekend I wouldn’t be surprised if we took a breather: (1) we’re had a big 3-week rally, (2) daily technical indicators have gone from oversold to overbought, and (3) it’s not uncommon for people to reduce risk and raise or hold cash going into long weekend, especially post 9/11.
True leadership is for the benefit of the followers, not the enrichment of the leaders.
(I wonder if W. and his buddies ever considered this)
FoxHollow Technologies, Inc. (Nasdaq: FOXH) came public at $14 per share seven months ago and doubled in less than a month. It then based for a couple of months, before breaking out again and running up to about $36.50 and falling into a 13-week base-on-base pattern, the most recent three months of which is shown above. Note the super tight and quiet handle from the end of April through this week’s breakout on the highest volume since its IPO. The volume surge was probably a combination of short covering (1.6 million or 15.4% of the float is sold short) and institutional buying. No doubt the stock appears rich, trading with an enterprise value of $765 million vs. TTM revenue of $55 million, but bear in mind that a $765 million EV is nothing in the world of medical products companies. And FoxHollow is in a massive growth mode, with year-over-year revenue growth of 350% and gross margin at 59% and rising. That’s about all the time I have today, folks, but before I go I’ll toss you the following company profile from Yahoo Finance and a link to the company’s website so you can poke around for yourself. Cheers!
The following article (in the continuation of this posting) finally got me moving to make the attached spreadsheet, which I’ve been meaning to do for a couple of months now. The spreadsheet — Download Federal_Debt_CHRISCO_Calcs.xls — shows not only America’s ballooning federal debt, but also the growing proportion that is financed by foreign private investors. If you download and open the spreadsheet you can see where I highlighted the most telling results of my calculations (the middle table of the spreadsheet). It shows that of the $1.59 trillion increase in the public debt since March 2002, private investors have financed $818 billion, or 51.4%, of the growth. That’s not in and of itself a bad thing, but what is troubling is the fact that foreign private investors financed $875 billion of the $818 billion total. That’s right, Virginia, the U.S. federal debt grew but over $1.5 trillion, private investors financed $875 billion of it, and U.S. private investors financed negative $57 billion of it, which is another way to say that the only thing keeping the ship afloat is the massive foreign investment — shit, you might as well call it an intervention — in U.S. dollars and assets, especially bonds, to keep the music playing and the U.S. dollar from depreciating too rapidly or U.S. interest rates to rise too much. The net result is U.S. consumers and businesses are enabled to spend beyond their means on cheap imports financed with cheap money (great for the housing bubble, too)! That’s a recipe for a great party, but when those inflows stop the hangover eventually starts. And I think I hear the morning birds chirping (GM, housing market), warning that morning is coming (probably sooner rather than later). Cheers!
RSA Security really shit the bed after its earnings warning a few weeks ago and now the stock is at 2-year lows. Still, I have taken a 1/2 size position, which I’ll either add to or cut when we see how the first rally attempt off the bottom goes. What’s even got me still interested in a stock with downtrending chart that may or may not be forming the bottom of its base, is the fundamental and mass psychology trends I am picking up on…
Thought is action in rehearsal.
As shown on the chart above, we’re up from the oversold low of April 29th, when multiple secondary and psychological indicators were inviting a rally attempt. On cue, the price and volume action painted a perfect reversal picture (undercut of prior low, then rebound on high volume to form a hammer and kick off a rally). Now we’re at the 50-day moving average and resistance around $36, so this week the Cubes will likely be forced to show their true intentions. Note the lower volume on the weekly rebound, which is a yellow flag. Cheers!
Also from today’s Wall Street Journal, an interesting article discussing t-shirt sales on the Internet…. Turns out it’s a good thing, if you’ve got good design, marketing, and distribution. I love to hear this kind of thing…. and it might be good for my domain name portfolio, which includes some t-shirt-related names, such as: a1tshirts.com, alternativetshirts.com, anytshirt.com, backstagetshirts.com, choppertshirts.com, cooltshirts.info, earthdayshirt.com, heavenlyshirts.com, and nytshirts.com. Some good vertical niche’s there, huh. I think that heavenlyshirts.com one needs to be launched with the slogan, "Because He wants you to have this t-shirt." Or maybe, "If you don’t buy this t-shirt you’re going to hell!" Let me know if you’ve got any other good slogans I can use, just remember that by telling me you are transferring any ownership rights you might have in the slogan over to me! Seriously!! Ok, just click on through to read the article. Cheers!
Below is an article from today’s Wall Street Journal about the FDIC’s new report showing that the current housing boom is, yes Virginia: (1) on a national scale, and (2) the most widespread housing boom since it’s been keeping records. Just one more thing that people can look back on in a few years and wonder why they weren’t paying attention. Just click through to read the whole article. In a few years you can see it all explained in the Fannie Mae Movie (I just saw the some of the Enron Movie this weekend in NYC… You gotta check it out! Cheers!
Just got back from NYC and only have time for a quick post right now, but had to mark Friday’s chart as notable. As you see, on the final day of trading for the month the Cubes (Nasdaq: QQQQ) undercut their prior low and showed a pretty big loss in the morning, then closed at the top of the range, with a gain on strong volume. Also of note this morning is the weekly NYSE Specialist-to-Public Short Sales report (a secondary, psychological indicator), which printed a 5-year high, meaning that the public is finally coming around to shorting the market, which of course is a contrary indicator. Of course this ratio is called a secondary indicator for a reason, but it’s still worth noting. Cheers!