Wednesday, June 23, 2010

The Road Back to ... The "Double-dip" Recession

Well what do you know, those artificially inflated "good" housing numbers over the first half of 2009 and late 2008 are just that - inflated. May's housing numbers are not what you would expect in a recovery, no not even close. [Emphasis from me in bold]

The Commerce Department reported Wednesday that new single-family home sales dropped 32.7 percent in May from the previous month to a seasonally adjusted annual rate of 300,000. Analysts surveyed by Bloomberg had predicted a decline of 18.7 percent.

The percentage drop was the largest monthly decline since the government started tracking the numbers in 1963. The annual rate also ranked as a record low. New-home sales fell by double digits in every part of the country, led by a 53 percent drop in the West.

If you had gotten in a conversation with me anytime over the past year about buying a house, you would have heard me tell you not do it as an investment, nor to do it for the $8000 credit. If you were to buy one, buy one because you found a house you loved and it was a good deal (without taking the $8000 credit into consideration).

Despite what the media has been telling you constantly over the past year about our V-shaped recovery and that we are on our way out of this recession, the truth is the job growth is still not there.

While I basically erased my 180% gains on the year [and proceeded to further decimate my account] over the last two weeks due to this false-rally, I will be back. And when I do, I will not make this same mistake again. Note to traders: Shorting with vigor and tenacity requires exactly that. On the flip-side, it also requires you to be prepared to get a full-on beating with similar vigor and tenacity. That said, it was a great experience (positioning 100% long/short in trades) as I believed I picked up some nimbleness in my trading.

P.S. If 109 breaks on SPY, not a good sign for the bulls!

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