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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (11922)	1/26/2002 9:48:27 AM
From: GREENLAW4-7	Read Replies (1) \| Respond to of 23153

DB, The Home-Builders are looking as if they want to go higher, and technically they have. One who looks at this group must look what will transpire over the next 3-6 months. If you look at the breakout last summer on these stocks, many back then said the same things I hear now. These stocks were suppose to outperform, but just rolled over and in a big way. (ie. BZH) The reason they rolled over was expectation the easing cycle of FED was over. As well as fears that the HOUSING BUBBLE would be POPPED in early fall/winter of 2001. The BUBBLE did burst, but then slowly gained air again as FED continued to add liquidity as well as BUILDING added steam in fall and winter. The BLOW-UP in these stocks in late December was again caused by SHORTS covering as the stocks has great earnings< as well as some window dressing. Over the first 2 weekin Jan, it looked like the DOUBT began again in the sector as many said FED would be curtailing liquidity in coming months. The stocks all seemed to again roll over at TOPS, after they had fantastic earnings. Now brings me to my point SQUEEZE in the group. We have had again great earnings, so great that I doubt many of these stocks can have such expansion w/out further liquidity. The group is growing at about 20-30% per quarter for the last 2. This week again shorts ran as money flowed into the sector, but the money I see is not long term, but rather short term trades to ride the trend. This trend look about over, and I expect a quick hit then a slow trend down into LOWERED EXPECTATIONS going forward for group. Look at the upgrades on these earnings, there was like 1, and actually MDC got a downgrade on great earnings. The group has gone about as far as then can go in current economic enviroment. Here is what will WEIGH HEAVY on sector in coming weeks. Fed is finished in LIQUIDITY BATH. They must becareful of causing DEFLATION w/ its monetary policy. secondly, most of these companies book a sale as a deposit prior to being constructed. As we head into the second leg of our recession, I sincerely expect the CONSUMER to lead the next leg down. It will be apparent in the summer, and the retail stocks as well as the Home-Builders will take this on the chin. Its important that anyone who is long these stocks must have expectations these companies can continue to expand thier growth at a 20% or beter pop. This would mean our recession would come to an end w/out having any negative effect on the housing sector. History says THAT CANNOT, AND WILL NOT HAPPEN. Greenspan himself is warning the public that the consumer and its appitite for new houses has lessened the effect of current downturn. This is only TEMPORARY, and will soon hit this sector in next 2-4 months. So thats my VIEW on this sector, and why I believe it represents to a patient Shorter an opportunity that does not usually arise in such economic milaze. Good luck to all!!