Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

CGTS FOR TUESDAY, 22 DECEMBER 2009: COMMON SENSE SAYS HOUSING MUST COME DOWN MUCH FURTHER

CLARK'S GATE TIMING SYSTEM
Tuesday, 22 December 2009
 

“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

    -- John Maynard Keynes

Think about it. Historical average gains in housing are 2% per year, 3% tops.  Why is this the case?  Because housing prices and salaries/wages increase at about the same rate.  This is a historical, ecomonic necessity.

From 2001-2007, some housing markets gained 200-250%.

Math suggests these gains from 2001-2007 should have been 21% for the same period of time, taking the historical average at the high end (3% per year).

Subtracting the speculative bubble gain of 200% from the historical average 21% suggests we should see a pullback in housing prices of much more than 30%, if we are returning to the averages.

A $180,000 house that appreciated by 200% from 2003 to 2007 would be valued at $540,000 in 2007. A decline of 30% (considered steep by most analysts) would bring the price down to $378,00, a loss of $162,000.

But, considering that the house 'should' have been selling (according to historical norms) at $201,000 in 2007, instead of $540,000, we have a discrepancy of $339,000 NOT $162,000. This house, in fact, needs to decline $177,000 more in order to correct for feeding-frenzy bubble hysteria.

The housing market is NOT the stock market. Housing MUST BE BASED on affordability factors (salary being the prime factor, interest rates also, to much less extent). Housing appreciates 2-3% a year BECAUSE this is historically what salaries appreciate. This isn't rocket science.

Wall Street tried to turn housing into another stock market -- and we are now experiencing the results of that. We have to have prices return to the norm, or all Americans willl have to receive raises in pay and retirement pensions of 200%, so they can again afford American housing.

The geniuses on Wall Street miscalculated.



A lot of new buy signals today (see below).  We took some profits, including a 26% gain in Best Buy (NYSE:BBY).


DAILY PORTFOLIO


Our daily portfolio is up 12%, with the first trade being on 6/29/09 -- so this is roughly a 25% annualized rate.  Note: we are also including the number of short trades in each portfolio and the percentage of long trades to show how overwhelming the bullish trend is at the moment.  These percentages should begin to change as time goes on. 


  DAILY PORTFOLIO   Active Active First Short % Long
% Gain 12/21/09   Profit Trades Cost Trade Trades Trades
12.17% M2F alt Trading System   $142,431 117 1170000 7/27/09 23 80%
10.69% M2F ALT LT 2 Tr Syst   $110,121 103 1030000 7/8/09 12 88%
17.50% M5 10 Trading System   $113,760 65 650000 6/29/09 11 83%
11.79% M5 D Simple   $55,414 47 470000 6/29/09 5 89%
11.98% M5/M5Avg Sum Plus New   $26,353 22 220000 9/5/09 2 91%
                 
12.66% Total   $448,079 354 $3,540,000      
  *Based on $10,000 per trade          



21-Dec          
MONDAY          
M2F Alt Trading System      
New Trades        
M2F ALT Trade Closed Trades      
Issue Close @ Position Open @ Date % Gain
MA 255.36 Exit Long $236.19 11/23/09 8.12%
BLK 240.8 Exit Long $223.87 12/8/09 7.56%
M2F alt Trading System New Open Trades    
Issue Price Position Shares    
COP 50.6 Enter Long 197.63    
VALE 27.45 Enter Long 364.30    
ACH 27.07 Enter Long 369.41    
DJI 10414.14 Enter Long 0.96    
STJ 37.17 Enter Long 269.03    
BVSP 65925.188 Enter Long 0.15    
HON 39.57 Enter Long 252.72    
KO 57.18 Enter Long 174.89    
MMM 81.43 Enter Long 122.80    
EWV 48.91 Enter Short -204.46    
           
M2F ALT Lterm 2 Trade Closed Trades    
Issue Close @ Position Open @ Date % Gain
AOB 4.4 Exit Short $4.12 10/11/09 -6.36%
KO 57.18 Exit Long $53.51 10/28/09 6.86%
SLAFX 50.76 Exit Long $52.73 12/10/09 -3.74%
VALE 27.45 Exit Long $28.02 12/9/09 -2.03%
ACH 27.07 Exit Long $27.80 11/25/09 -2.63%
HOG 25.68 Exit Long $27.64 12/11/09 -7.09%
M2F alt Lterm 2 Trading System New Open Trades    
Issue Price Position Shares    
HIS 21177.08 Enter Long 0.47    
PEP 60.48 Enter Long 165.34    
TWX 30.37 Enter Long 329.27    
XOM 68.51 Enter Long 145.96    
GES 43.26 Enter Long 231.16    
WMT 53.4 Enter Long 187.27    
CA 22.65 Enter Long 441.50    
ROK 47.1 Enter Long 212.31    
VZ 33.03 Enter Long 302.76    
           
M5 (10) Trade Closed Trades      
Issue Close @ Position Open @ Date % Gain
BLK 240.8 Exit Long $230.35 11/25/09 4.54%
BBD 20.41 Exit Long $20.37 12/18/09 0.20%
M5 (10) Trading System New Open Trades    
Issue Price Position Shares    
PPA 17.04 Enter Long 586.85    
CUT 17.67 Enter Long 565.93    
GSK 41.83 Enter Long 239.06    
PCLN 219.23 Enter Long 45.61    
JNJ 64.33 Enter Long 155.45    
BA 54.3 Enter Long 184.16    
GES 43.26 Enter Long 231.16    
EL 47.97 Enter Long 208.46    
STJ 37.17 Enter Long 269.03    
BVSP 65925.188 Enter Long 0.15    
HON 39.57 Enter Long 252.72    
KO 57.18 Enter Long 174.89    
EWV 48.91 Enter Short -204.46    
           
M5D Simple Trade Closed Trades      
Issue Close @ Position Open @ Date % Gain
None          
M5D Simple Trading System New Open Trades    
Issue Price Position Shares    
None          
           
M5/M5 Average Sum Plus New Trade Closed Trades  
Issue Close @ Position Open @ Date % Gain
BBY 40.07 Exit Long $31.59 10/8/09 26.84%
M5/M5 Average Sum Plus New  Trading System New Open Trades
Issue Price Position Shares    
None          





More information on this system can be found at

home.mindspring.com/~mclark7/CGTS09.htm

A draft of the book Turn Out the Lights can be found at the website below.  This book is a description of the metaphysical causes of the economic cycles of expansion (Day) and contraction (Night).

www.hoalantrangallery.com/Turnoutlights.htm
 

Michael J. Clark's Gate Timing System
Hanoi, Vietnam

84 4 221 92210





Disclosure: The author does not own issues mentioned in this article.




Disclosure: Disclosure: The author does not own issues mentioned in this article.