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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (22744)	12/2/2004 11:32:21 AM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Thu Dec 02 2004 10:45 trotsky (RANGY) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the way this stock acts, something must be seriously wrong. it can't be explained by the Rand's strength alone. is there something happening we haven't been appraised of? remember, with the Kebbles nasty surprises are the rule, not the exception. Date: Thu Dec 02 2004 10:42 trotsky (December gold contract) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the by far largest call open interest sits at the 450 and 440 strikes ( about 12,000 and 9,500 contracts respectively ) . it stands to reason that the call writers will attempt to drive the contract to a level by expiration time that inflicts max pain on these calls. put OI support comes in at 430 and 420 ( approx. 7,000 and 6,100 contracts respectively ) . note that the 430 to 440 zone is also a reasonable technical target for a correction, since 430 is the previous resistance level that should now become support. whether the call writers will succeed in this is of course a different matter. they will try, but success is by no means assured. if e.g. today's sell-off reverses very quickly ( within a day or two ) it will be more likely imo that it turns into a run-away market.

To: ild who wrote (22744)	12/2/2004 12:42:45 PM
From: John Vosilla	Respond to of 110194

Agreed that volume usually dries up at the top while inventory levels shoot up dramatically. Are you saying that foreclosures are already at high levels in San Diego or was that on a national level? From what I see we still have much lower foreclosure rates than a few years ago in many of the overvalued bubble markets but record foreclosure levels in many midwestern areas that never really participated in the housing bubble. It kind of makes sense that homeowners are delaying the inevitable in highly appreciating areas using their rising home values as an ATM. Also supports your premise that housing markets can bust even without a sharp rise in interest rates. <how come then that over the last 6 months alone, residential real estate transaction volumes are down about 30% in San Diego ( roughly the same thing applies to other cities and counties in CA ) , while inventories ( homes for sale ) are up about 80%? the period in question has actually seen FALLING rates, not rising ones. a 'temporary soft patch'? do you think it's impossible for a bubble market to become saturated and peak without an exogenous trigger? please note, in spite of the lowest mortgage rates in two generations, monthly mortgage ( and property tax ) PAYMENTS are up at a record high. meanwhile, affordability is at a record low and rental yields are at a record low, since prices have risen further above trend than at any time in history. also, foreclosures and delinquencies rise relentlessly month after month - and are at a multi year high. the probability that the bubble has ended is very high - prices haven't come down much yet, but this is the typical time lag embedded in what is a rather illiquid market. the damage will only become obvious once transactions that have been postponed due to too high asking prices get done ( this is what the inventory/sales ratios tell us unequivocally - when inventories rise sharply while transaction volumes fall, it is because the spread between bid and ask prices is too large ).>