Snorting bulls just got Ashton Kutcher punked two days in a row here; late yesterday and buy the dip first thing this morning.

We are close to first support here as the S&P is down near 1050; we have loads of support areas below that. I am still spying that little gap in the SPY chart near 102 (roughly 1020 on the S&P 500)

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Remember what we have been saying about seasonality in housing for many a month. Despite the Fed spending over a trillion of your dollars to manipulate mortgage rates down to 5% (or below); despite $8000 handouts to first time home buyers, despite FHA loans at 3.5% down and apparently even 0% down in other federal agencies... there still has been no real surge in housing. If you look year over year, the metrics still stink - but no one is looking at that as it is inconvenient to a green shoot thesis.

Just imagine how bad things would be without such government intervention... this is why I can see no way the housing handouts do not continue, we need a fully subsidized economy where we employ generational arbitrage - steal from future generations to give to today's. Otherwise we are faced with what I call the core economy aka the non subsidized economy - and that is not pretty.

Seasonality begins to float away...

  • Sales of previously owned U.S. homes unexpectedly fell in August, a survey showed on Thursday, a minor setback for the housing market's recovery from a three-year slump.
  • The National Association of Realtors said sales fell 2.7 percent to an annual rate of 5.10 million units, from 5.24 million units in July. That compared to market expectations for a 5.35 million unit pace.

Now if we were being intellectually honest all those who cried to the heavens in ecstasy when MONTH OVER MONTH data was improving, should be wringing their hands. But we can't have that.

  • NAR Chief Economist Lawrence Yun described the decline as a mild retreat

I will stress this, just as I have the past 6 months - you MUST look at real estate year over year not month over month. It is seasonal - you can't compare a July to a March. All those who were excited that May housing purchases were higher than March, will now scoff that October is weaker than August. Only when seasonality works for you do you tout month over month gains; when it works against you - you ignore it.

Then you drink Kool Aid.