[Editor's note: The Update will most likely not be published on Thursday evening. We will be back again on Sunday evening.]
This evening seems like so many others as we have moved up the mountain on the stock market since the lows back in August. Looking at the Asian markets, they are climbing a sheer cliff with seemingly no difficulty whatsoever.
But, at least here in the US, the stock market is starting to show significant signs of fatigue. There will probably be a little more upside but it is laboring to make those gains. Earnings season is upon us, the time when companies try their best to make everyone think things are going well so owners don't sell their stocks. Alcoa tried its best to do that as the normal first of the Dow stocks to report quarterly earnings.
Tonight, we can only say that things underneath the fluffy bullishness are not so bullish. The bullishness alone, since it is so intense, is bearish by itself. The low volume on the advance is another sign of a weak advance. With narrow leadership the market will have difficulty moving forward. The likes of the four horsemen can't be duplicated even by the four horsemen.
The time has come to set up bearish camp and watch the market fall.
The housing market, along with the mortgage world, is back in the news today with a prediction by the National Association of Realtors predicting a 10% plus drop in existing home sales this year. We are not surprised except by the lateness, it's already October 10th. The other news seems to be the groups that are beating up the mortgage servicers for their lack of speed or performance in adjusting troubled mortgage loans.
As we write this we noticed that the WSJ will be publishing a front page article [that could be] entitled "United States of Subprime" which talks about how pervasive subprime really is. This will be read by many people around the world.
Another issue that is now coming up, which the WSJ is reporting on too, is the evictions of renters due to the landlord being foreclosed for nonpayment. One of the people we know had this happen this past week and she laments the possibility that she will lose her damage deposit. This crisis affects people who didn't have anything to do with it. This is just the beginning.