The Fed Added A Massive $17 Billion In Credit Today And Reliable SPX/Market Lead Indicator WMT Is Outperforming
The Fed added a massive $17 Billion in credit today (http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE), not unusual for punch spiking Thursday, and, reliable SPX/market lead indicator WMT is outperforming again today, at a very bullish greater than +1.00% versus SPX right now, after being a very bullish +0.66% yesterday.
Wave C of SPX's and WMT's intermediate term downcycle (SPX intermediate term cycle high was 1555.90, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) may have bottomed early today. The extreme behavior/volatility today, with some sectors like gold (HUI down about -10% at the bottom so far today) and the "uraniums" getting savaged, is typical of what happens near important cycle lows.
The WMT Lead Indicator has turned very bullish and index fund computerized program trading should kick in in a major way soon, barring major bad news on the mortgage/credit front.
The big fly in the ointment right now for the market is Countrywide (CFC) and other big mortgage lenders. Countrywide apparently borrowed $11 Billion today, but, is down about -15% right now.
The interest rate on jumbo mortgages of $417,000+ is about 12-13% recently (they've doubled, and, might even be higher now), because, lenders want a much higher interest rate in order to compensate for the added lending risk, due to the fact that loan default rates have spiked dramatically.
In places with high home prices, like California, the purchase and refi markets are just about shut down right now, according to a recent New York Times article:
This New York Times article, http://www.nytimes.com/2007/08/12/business/12mortgage.html?_r=1&hp&oref=slogin, you will probably have to register (it's worth it), is very interesting reading. The mortgage crisis is a huge problem, bigger than most people realize. This article helps to get that point across "big time." Here are some snippets:
"Conventional mortgages cost less than they did a few weeks ago, thanks to a decline in Treasury bond rates. But jumbo mortgages, where they are available, cost much more. The difference has gone from less than a quarter of a percentage point to more than two-thirds of a percentage point.
Jumbo mortgages are most important in areas with high home prices, most notably on the East and West coasts. “In California, it has shut down the purchase market,” said Jeff Jaye, a mortgage broker in Northern California. “It has shut down the refi market.”
The problems with subprime mortgages erupted as home prices began to slip in some markets, making it harder to refinance mortgages. There were reports that a surprisingly large number of loans made in 2006 were going into default only months after the loans were made. "
....... http://www.JoeFRocks.com/ .
Wave C of SPX's and WMT's intermediate term downcycle (SPX intermediate term cycle high was 1555.90, see chart 1 at http://www.joefrocks.com/GoldStockCharts.html) may have bottomed early today. The extreme behavior/volatility today, with some sectors like gold (HUI down about -10% at the bottom so far today) and the "uraniums" getting savaged, is typical of what happens near important cycle lows.
The WMT Lead Indicator has turned very bullish and index fund computerized program trading should kick in in a major way soon, barring major bad news on the mortgage/credit front.
The big fly in the ointment right now for the market is Countrywide (CFC) and other big mortgage lenders. Countrywide apparently borrowed $11 Billion today, but, is down about -15% right now.
The interest rate on jumbo mortgages of $417,000+ is about 12-13% recently (they've doubled, and, might even be higher now), because, lenders want a much higher interest rate in order to compensate for the added lending risk, due to the fact that loan default rates have spiked dramatically.
In places with high home prices, like California, the purchase and refi markets are just about shut down right now, according to a recent New York Times article:
This New York Times article, http://www.nytimes.com/2007/08/12/business/12mortgage.html?_r=1&hp&oref=slogin, you will probably have to register (it's worth it), is very interesting reading. The mortgage crisis is a huge problem, bigger than most people realize. This article helps to get that point across "big time." Here are some snippets:
"Conventional mortgages cost less than they did a few weeks ago, thanks to a decline in Treasury bond rates. But jumbo mortgages, where they are available, cost much more. The difference has gone from less than a quarter of a percentage point to more than two-thirds of a percentage point.
Jumbo mortgages are most important in areas with high home prices, most notably on the East and West coasts. “In California, it has shut down the purchase market,” said Jeff Jaye, a mortgage broker in Northern California. “It has shut down the refi market.”
The problems with subprime mortgages erupted as home prices began to slip in some markets, making it harder to refinance mortgages. There were reports that a surprisingly large number of loans made in 2006 were going into default only months after the loans were made. "
....... http://www.JoeFRocks.com/ .
Labels: Gold, Gold Stocks, HUI, NEM, Silver, Silver Stocks, SPX, XAU
posted by Joe Ferrazzano at
7:50 AM
