July 1, 2012
Weekly Market Outlook
By Keith Schneider
While most market participants this week focused on the Supreme Court decision on Obamacare or the Euro crises, a stealth bull market in housing stocks has taken hold. The segment of the economy that ushered in the financial meltdown has arisen from the grave. Leading home builders such as Toll Brothers (TOL) and Lennar (LEN) are on new highs for the year and handily beating the benchmarks.
Both were immune to the downdrafts that hit the market as we bounced off various walls of worry. In fact, while the Dow Industrials were down almost 180 points on Thursday, these stocks barely budged and closed positive. Looking back to recent history, it was those same stocks that broke badly in 2006-2007 well in advance of the housing meltdown and subsequent financial panic. Has the housing market emerged from the grave; or is it merely enticing the bulls, only to pull them and the rest of the economy down yet again?
While Elliot Wave theorist’s and economists expect a nasty leg down shortly as part of our deleveraging process, we believe that these housing stocks are foretelling something quite different. It was a wild ride this week that went from panic to euphoria, ending with an excellent quarterly close for US Equities. Let’s go to this week’s video and see the empirical evidence.
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