Still Bullin It

Not many comments from me this weekend. I think that bull market in stocks is still all on. Although we have discovered the importance of the yield curve and rising interest rates in the past week. The important relationship between interest rates up and market down and vice versa has reasserted itself. Here is a snapshot of the interest rate moves:
Yield curve has a healthier shape to it with long rates higher than short, but the general rise across the board in interest rates is bound to continue to put pressure on both stocks on real estate. I think we are seeing two major drivers here: 1) foreign selling of our bonds due to dollar fears and 2) higher inflation expectations being priced into bond returns.

I am not sure what the cracking point is for our stock market but I think that 5.5% - 6% on the 30-year is probably a good bet. I have been following my real estate meltdown spreadsheet closely to highlight the progress of the subsectors :

Summary - % Decrease from 52-Week High
Sector	% Change
Humongous Banker and Broker(Major US Financial Institutions)	-2.82%
Mortgage Insurers	-3.50%
REIT - Diversified	-6.99%
REIT - Hotels	-7.06%
REIT - Retail	-7.14%
Mortgage Companies	-9.64%
REIT - Office	-9.77%
Real Estate Manager / Developer	-10.00%
REIT - Industrial	-10.06%
REIT - Healthcare	-10.11%
Mortgage Companies / Government Affiliated	-13.60%
Title Insurers	-14.98%
Homebuilders	-22.96%
Mortgage Investment Trusts	-29.47%

As you can see the REITS and lenders are still probably in bull cycles. It is instead the homebuilders and mortgage investment trusts which may have already entered the bear. I plan on being patient while watching the REITS and mortgage companies put in a top - although long term these will probably be the best shorts.

I am thinking of probing again on the downside this week with either Toll Brothers (TOL) or Pulte Homes (PHM) - still I would like to see both stocks make a false breakout above the 200-day moving average before I began the position. Here are the charts:


Thats it for this weekend. Again not much conviction on the starting point - but I do think I have some good candidates for getting the positions going again.

Best regards,

BG