Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Randoms: Has Housing Bottomed?


"Mission Accomplished" is a matter of perspective.

As I walked out of my apartment this morning and scooped up my newspapers, I was struck by the universal optimism in the headlines.

The New York Times front-page headline proclaimed "3-Year Descent in Home Prices Appears At End: New Hope for Recovery." In the article they quote chief economists who matter-of-factly state, "We've found the bottom" and "Recession is over, economy is recovering-let's look forward and stop the backward-looking focus."

The Wall Street Journal
, somewhat more balanced, highlighted "Home Prices Rise Across U.S: Bargain Hunting, Low Rates Drive First Gain in 3 Years; Double Dip Still Possible."

I'll again share
that I, like you, stand to gain from a sustained economic recovery and would love nothing better than to see a true turn. As we're apt to do in the 'Ville, however, I would urge Minyans to maintain perspective. A quick sniff at the Standard & Poor's Case-Shiller index, which tracks home prices in 20 metropolitan areas, does just that.

Click to enlarge

I've long maintained, when discussing bubbles, that excess breeds excess and over time, a revision to the mean is a natural progression for free markets (I know, work with me here).

It stands to reason that what dramatically overshoots to the upside should do the same on the flip side. We've seen it in the Nikkei, the NASDAQ, China, Crude (OIL) and it should also prove true in housing, particularly given that the consumer represents 70% of GDP, unemployment continues to be problematic and, perhaps most importantly, social mood and risk appetites have meaningfully shifted (this is a process, not a point).

To be sure, that doesn't mean equities can't continue higher. We spoke yesterday about S&P 1150ish being the S&P downtrend line from the 2007 highs; we can rally 17% from here and still be in a pronounced pattern of lower highs.

For my part, I'm viewing the big picture as a series of smaller pictures, most recently fading (read: making sales at) S&P 980. I covered 25% of that position yesterday into the slippage (make it to take it) and will stop myself out if we pop through that pup. Gun to head, I still foresee a double-dip, albeit one that is admittedly more elongated than I initially sensed, while respecting both sides of the equation.

One step at a time as we together find our way. While it's no longer "in vogue," I continue to operate through the lens of risk management over reward chasing with an eye towards Financial Staying Power. Incredible opportunities will abound-some have already started to do so-and I plan to have plenty of dry powder to pounce when we see the whites of their eyes.

As always, one man's humble opinion.

Random Thoughts:

  • Could the swine flu fast-track isolationism?

  • Traders are being blamed for the oil spike? I'm tempted to sniff for some sorta connection to Goldman Sachs (GS) (remember the $200/brl call?) but that's a mouse in a maze at this point. Besides, Keyser Soze has nothing on Lloyd Blankfein!

  • STOP THE PRESSES! Minyanland and Random House are partnering on a scavenger hunt in the city of critters. If you've got a Mini-Minyan in your midst and wanna teach him or her the benefits of earning, spending, saving or giving, send 'em on over! It's free, and it's fantastic!

  • The Fed's Janet Yellen sees the "first solid signs" of the end of the U.S recession? AWESOME!

  • The standout action out of today's gate? Citigroup (C) (+3%) and Bank America (BAC) (+2%) (a quarter and a dime, as a matter of perspective). It's not the absolute price action I'm monitoring; it's the ripple effect they may have on psychology.

  • The most bearish thing on my screen? Commodities (crude –3%), breadth (to '2:1 negative on the Nazz) and the proximity of S&P 980 ("a" level, not "the" level). And yeah, the quick 5% snip in China is vibing in the back of my keppe through the lens of dogs and tails.

  • The most lyrically appealing thing on my screen? This.

  • Yeah, S&P 955-980 seems a bit "pat" to me too but heck, look at how "well" S&P 875-955 worked?

  • Until (and if) the lower band tag of our current range is breached, the bulls will be card-carrying members of the pay-no-mind and buy the dip crowd.

  • And finally, so it's said, my intention with Memoirs is not to hurt anyone and I hope Minyan knows me well enough to know that. I've left out a lot of things about a lot of situations in an attempt to take the high road; I'm simply sharing my tale with truth and trust. After all, all we have is our name and our word.


position in spx

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos