Tag Archives: lumber

Econ Nazi To Homebuilders: “No Soup For You” – Lumber Is Limit-Down

Buyer of my homebuilder research:   I’ve never gotten a bigger return for the value. Paid $25 pay for the report,  invested $4k in KBH Jan 15’16 $15 put since August [2014] and closed today [mid-Jan 2015] for $3.2k profit.

The price of lumber is the “tell-tale” of the tape.  It sold down hard early in the year and got a manipulated dead-cat bounce along with oil.  It’s limit-down today and headed back to multi-year lows:

Untitled

Homebuilder sentiment peaked in mid-2005, just in time for Dow Jones Home Construction Index to plunge from 1,039 to 140 over the next 3 years – click to enlarge:

UntitledOutside of AMZN and private Silicon venture plays – which can’t be shorted – the homebuilder sector is THE best sector of the market to make a lot of money shorting. My reports will help you understand why:
HOMEBUILDER SHORT SELL REPORTS

This sector has more debt and more overvalued inventory than it did at the peak of the market in 2005/2006.  The p/e ratios are several multiples higher.  The last of the public has gorged on easy credit and “easy flips.”  This will be worse than the bear that started in 2005/2006 – the second leg down in bear markets always is…

Once I get my reports updated, I will be raising the price.

Reader Response To My BLS/SPX Call

Dave, thanks for your recent prediction about this, which enabled me to scalp a tidy profit from the SP spike. Shortly before 8:30 EST I bought some SP 500 – leveraged 20 to 1 – then watched the 8:30 spike you predicted, then got out as soon as the spike began to dip. I closed just before it hit 2100, because I knew 2100 was the symbolic figure the machines were targeting.

And I took an extra little scalp from the simultaneous gold spike, again getting out as soon as the spike stopped.

PS, I also got back into shorting Amazon as it opened with a hedge-fund/algo spike at exactly 9:30 EST, as it was front-run primed by the anticipated non-farms payroll Soviet data.

NOTE:  The DJUSHB homebuilder index is pulling back too.   Great time to short homebuilders.  HOMEBUILDER SHORT SELL REPORTS

Especially with the price of lumber crashing AGAIN:   LINK

 

Collapsing Price Of Lumber = Expected Collapse In New Home Sales

The price of lumber has dropped 3% today.  It’s dropped 25% since October.   It’s dropped 36% since mid-2013, which is when I have shown in several articles that unit volume in the housing market began to decline.

Untitled

This has nothing to do with the expectation that the Fed might not raise interest rates after today’s horrible retail sales report.   Unit home sales volume has been in a decline since July 2013 despite the Fed’s zero interest rate policy, record low mortgage rates, big reductions in down payment requirements my Fannie Mae and Freddie Mac, big reductions in mortgage insurance premiums by the FHA and the proliferation of zero down payment mortgages by the USDA:  LINK

By the way, although the USDA states that its “no down payment” mortgage is for rural homebuyers, the definition of “rural” includes most lower-end housing communities that have sprung up less than 20 miles from big cities like Denver.   Areas that used to be called “ex-urbs.”

The collapsing price of lumber is telling us the same thing as the collapsing Baltic Dry Index and the collapsing price of oil:  this country is headed into a deep recession. Numerous recent economic reports, including today’s disastrous retail sales report, are showing economic activity that is now back to 2008/2009 levels.

The Fed is caught in a trap.  The market manipulation is breaking down.  The housing market is next….Homebuilder Research Reports.   Click to enlarge:

Untitled