Great Shorting Opportunities Ahead in Home Builders, Banks

[The following is excerpted from Bill Cara's Daily Report]

As I see it, the Euro looks to be headed to a test of 1.38, which would be the time to move back into precious metals with at least a partial position. There is support for the euro at 1.40. The Cdn Dollar looks to be going to test 93.

The Financials will have to top out here for me to want to move strongly into these currencies and the precious metals though.

Despite rising mortgage rates and tightening credit, the share prices of US House Builders soared Tuesday. Some of the gains were of the nose-bleed variety, such as Meritage Homes (MTH) (+18.1%), KB Homes (KBH) (+14.2%), Beazer Homes (BZH) (+13.3%) and DR Horton (DHI) (+12.2%).

Traders are being told that rates will now come down (despite inflation and the crowding out in the capital markets as banks scramble to recapitalize) and credit will ease (despite special loan departments at the banks working overtime to squeeze their clients).

I think the market is setting up a terrific shorting opportunity in the residential construction companies, and in the weakest banks and dealers.

Comments

[MarvinMBA:]

I wishfully think you are wrong but I have to agree with you. Todays market reality check verifies your conclusions and mine too. This is just a band aid for an underlying problem...higher and higher unemployment and higher and higher overall inflations and low low low housing prices. It might take a Depression to get over this. In fact all of the cards are lined up now for a long term Depression and second status of the US on the world scene. You can thank this administration for orchestrating the countries downfall.

2008 Sep 09 12:28 PM

[Andy Cole:]

Couldn't agree more.

2008 Sep 09 12:38 PM

[levin70:]

"Despite rising mortgage rates"

Excuse me?

Care to correct that

2008 Sep 09 01:04 PM

[capital pains:]

We are in complete agreement...We all knew yesterday's rally would be ephemeral at best, and today we are back to "normal". Normal, being dreadful. The rally lasted 1 whole day, fantastic !
With the media beating the "gloom and doom scenario" to death, along with the actual gloom and doom facts, there seems to be no reason to commit dollars to this manipulated and factually horrendous market.
Shorting does seem to be the only reasonable play in the market.
To me, the market has become so tedious, so self-abusing, such a waste of money and emotions, that short or long, why bother now at all ?
We are staring into the abyss. I personally am not betting my hard earned money on the guess that there is "light at the end of this tunnel" any time soon. Of course, if I were a hedge fund manager, I wouldn't care how much clients money was lost. I would only concern myself with December's bonus ! Since it is my money, I do care. The market won't see one dime of my money any time soon.
Cash is king !
Good Luck ....

2008 Sep 09 01:12 PM

[phdinsuntan...:]

everybody is playing the global recession game or global financial meltdown of credit default swaps now, after the greenback backed $ 1500 billions of bonds holded by foreign and local (if any) banks. How much is enough? something changed from last friday? just less value for the dollar. Ok lemmings, run for your greenbacks as the respectable japanese housewives run for their yens. Maybe the next man in charge will do something diferent than fiscal expansion, I dont think so, and with monetary policy as is now, if there is not a global recession or meltdown, the exodus of investors in US paper will be memorable.

2008 Sep 09 01:28 PM

[nukldrager:]

Is this a set up? Are these guys all building in Dubai?

2008 Sep 10 04:53 PM

[raytayzmd:]

Is this the same Bill Cara that called for shorting IFF at 22 bucks back in October, 2005?...from whence, it climbed eventually to over 40 -- not counting dividends -- over the next two years?...if you want an accurate assessment of Mr. Cara I suggest perusal of the "comment" shown after one of his other posts:

seekingalpha.com/artic...

2008 Sep 11 02:43 PM

[User 271092:]

Yes now writers are not at all talking about that.I don't know what happened to all of them.I think they might not have any thought.
For Sale By Owner

2008 Sep 26 10:56 PM