Financials and Housing

Not only do I think the housing index will retest its lows, but I think it makes new lows. As a result, the financials could do the same. Home foreclosures are up 125% over last year and 25 million Americans owe more on their mortgages than their homes are worth. Bill Gross thinks total write offs will total $ 1 TRILLION and only half of that has made it through the system. I've been saying for a while now that the banks have broken revenue models because of the implosion of sub prime(a big ticket for them) and the vaporizing of their derivative products like CDO's. Sure, there are arguments for a bullish case I guess, but for my money, and I put it on the line everyday, I trust my scenario. Watch for more capital raising and obscene dilution.

Short and in Cash

I am not long at all here and I have a feeling next week could fade. I am short PCU,GLD and USO and will hold over the weekend and until further notice. I covered my XHB short for a nice little gain.

Can't Take Housing Sector Seriously

XHB got banged up pretty good and went out near the low of the day and the housing sector looks iffy at best. The financials gave some back and Oracle just fell short on earnings and that is taking the stock and the QQQQ down pretty hard here. Oil rallied big and I am still up on my USO short with my stop in place. PCU went up again and I am about a point down on my average short price around $105. I think GLD can muster maybe another point or two to the upside,technically speaking, but will then resume its decline. Still bearish to be honest.

End Of Quarter Window Dressing

The market is down slightly on the durable goods number. The market may hang in until Friday as I would think the hedgies want to show that they are long the right stuff,particularly financials as the month and quarter ends. I think we will have a decent correction soon, probably next week. I think housing and XHB is a short on the recent rally.