Technology Stocks & Market Talk With Don Wolanchuk Message Board

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Strategies & Market Trends : Technology Stocks & Market Talk With Don Wolanchuk

SOXL 61.79

-12.3%

Jan 30 4:00 PM EST

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To: da_cheif™ who wrote (31693)	7/16/2008 8:10:10 PM
From: Topannuity	Read Replies (4) of 208188

One BIG problem with this rally- ESPECIALLY since it was coming largely from a bounce in the financials is that the ABX sub-prime mortgage indices (even for AAAs) has not stopped hemorrhaging. These are the securities which Citi, Merrill, etc have issued and guaranteed and hold in their portfolios. The accountants are forcing the banks to keep marking down the values of their own subprime holdings to match the ABX levels. The ABX indices reflect the illiquidity, overhang and foreclosure rates in the subprime mortgage (and RE) markets. markit.com markit.com The stock bottom in March was accompanied by a bottom in the ABX. Without a stop in the ABX bleeding, no way the financials can move up. In fact, if you overlay the ABX over any stock index (DOW, SP, NQ) you'll see that nearly 100% of the directional movement in the indices the past 6 months has been PREDICTED by the direction of the ABX -- tick for tick. Check out above link Now could this be another bottom area for the ABX like in March? Possibly, we'll only know in hindsight. But I guarantee you if the ABX continues to head south next week (making new lows on this move), the financials will be toast.

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