ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Housing Market Intro and Summary Softening housing data pointed to more normalization in the housing market. Normalization is returning housing data to prior trends and in some cases suggesting important plateaus. Home builder stocks powered through the softening data to show strength in sharp rebounds and fresh all-time highs. The arrival of the Spring selling … Read more
Stock Market Commentary Many stocks rebounded sharply from intraday lows on Thursday. The flurry left behind key bullish signals. Buyers did not disappoint on Friday. They delivered strong follow through on the latest bullish signals even as sections of the market suffered targeted carnage. Indeed, the ability to ignore the targeted carnage was itself another … Read more
Stock Market Commentary A great stock market divergence continued last week. However, the market overall is looking more and more resilient as it continues to digest inflation fears. Even the biggest victim of the great divergence, the NASDAQ (COMPQX), remains well above its lows for the month. A very dovish session with Federal Reserve Chair … Read more
Just as I was going about to close the books on the seasonal trade in home builders, Lennar (LEN) revived upward momentum across home builders. LEN gained 13.8% after announcing a partnership with Centerbridge to invest in rental single-family housing. News of the “Upward America Venture” lit a fire across the sector. However, the excitement … Read more
Stock Market Commentary A great stock market divergence clarified itself last week. Growth stocks, especially the expensive and/or speculative kind, took a back seat to industrial and consumer names and other stocks primed to benefit most from the global economies reopening on a fresh wave of liquidity. This divergence renders a generalized view of the … Read more
Housing Market Intro and Summary A little over a month after Federal Reserve Chairman Jerome Powell suggested that the housing market would soon normalize, mortgage rates have increased and the stocks of home builders have generally gone nowhere. The National Association of Realtors projected much stronger growth in existing home sales this year than in … Read more
Mortgage rates are on the rise following record high lumber prices. Together, these measures are starting to weigh on the stocks of home builders. 30-Year Mortgage Rate The 30-Year fixed rate mortgage average in the United States hit 2.97% on Thursday, February 25th. Not only is this rate a 6-month high, but also the rise … Read more
If the housing market remains strong through 2021, Meritage Homes (MTH) may be one of the best catch-up trades in the cohort of major home builders. MTH hit an all-time high 4 months ago in October. Since September, MTH’s valuation has dropped from 2.0 (expensive!) price/book to 1.4, 1.1 price/sales to 0.7, 12.8 to 8.1 … Read more
“We are confident our positive trajectory will continue as not only did our fourth quarter net new contracts increase 45% over last year but we have seen our sales pace accelerate, with December up 54% and January increasing 77%. We are solidly positioned with a backlog of 3,439 sold homes, an increase of 66%, along … Read more
Stock Market Commentary Sellers beat a hasty retreat from the stock market as another bearish signal enjoyed a fleeting existence. The last bearish period lasted about three days. The previous bearish period barely survived a day. The stock market’s ability to quickly wipe away bearish signals is impressive. The buying force over the last week … Read more