A New Era Has Begun

While there is much to say, I want to make sure that we mention that the real estate market is probably going to show some signs of weakness. The next couple of months will be filled with opportunities in the housing stocks on the short side. Take a look at the chart for HME, a REIT, (you can use the Big Charts link to the left) for a dramatic look at the type of scare the real estate market had last week. A 10% down move doesn't seem like much when you think about it but when you see in on the chart it gives you a better idea.

The bond market decided to break down a little instead of trying to make that bottom we have talked about. If we see rates rise some more here, the fall housing market could be in a world of hurt. This is the tip off to the stock market that things are not as they have been. Of course, the stock market participants can and have tried to ignore any bad news but that thinking is about to catch up with them. The sweeping change in real estate psychology can and probably will overwhelm any valiant attempts stock bulls may have to hold up the market going from here. Real estate prices will not fall a fast as stock prices in the first run and certainly will not be readily seen like stock prices.

Friday's jobs' report was a little upbeat but the stock market didn't really think much of it and declined on Friday led by housing stocks, not such a good sign. The bond market just went down, meaning rates went up.

We are getting prepared for a slow rollover of the stock market here and expect, as we have been saying for a couple of months that the decline should take us into October at the least. More the rest of the week, we should have an exciting week so come back every day.

Dow Industrials: 10,558.03 -52.07 (Do I see 10,500 again? I think I do.)
BGEIX: 11.52