Saturday, September 22, 2012

Why Buy Real Estate?

Inflation maybe? Check out this gold chart;

click to enlarge

Gold is a often viewed as the ultimate inflation hedge. It certainly is very sensitive, and possibly its price is
the earliest indicator of future inflation expectations. 
The breakout above the downward sloping trendline was back tested successfully and followed by a powerful thrust up.
Note the RSI index at the top of the chart and the MACD index at the bottom are indicating an overbought condition shorter term.  
This longer term chart puts it all in context; 

click to enlarge
Note that neither the RSI or MACD are overbought.
The weekly chart illustrates a  breakout above a longer term downward sloping trendline.
The choppy sideways consolidation lasted roughly one year. It is quite likely that the upmove following that consolidation will last as long or longer (See the preceding patterns of consolidation and upward break outs).

Hello inflation.

Some of the great things about real estate as an inflation hedge ; 
its actual utility as shelter, 
it can generate income, 
the US gov. PAYS you to invest in it, 
leverage is super cheap, 
there are no margin calls, 
and if the system fails you possess it (ask the folks caught in MF Global's failure about that).
Finally it is the most undervalued asset class out there.

Friday, September 14, 2012

SP - Blow off Top?

 Daneric Elliott Waves has a good summation of the Alt counts on the various equities indexes including a discussion of ending wedge formation characteristics.
There are three potential long term alternative counts labeled in his chart below .

click to enlarge

My count and Alt. is simpler;  the nominal 2007 high IS the Grand Super Cycle high, rather than an irregular B wave high. 
The 2009 low IS the primary wave 1 ( alt. A), and currently this high is ending the 2 wave back ( alt B wave).
Splitting hairs on the various counts does not effect the short and medium term.
The preponderance of likely counts with extreme risk to the downside, wedge failure characteristics, bullish sentiment, breadth and volume on the move up; all suggest a sharp and explosive 3rd wave downward acceleration is imminent.

Tuesday, September 11, 2012

Chinese Crude Imports Crater

 From Zero Hedge;

 click to enlarge

At the moment it's roughly at the 50% retrace of the 2009 11.5 mm metric tons low
and  the 2012 25.5 mm metric tons high.

Monday, September 3, 2012

Natural Gas Seasonal Low?

The low print on Wed the 29th of 2.575 was right on the 50% pullback looked for in the August 9th post,
Post #1001- Natural Gas Update
" while still really liking NG for the long term, it is looking vulnerable to a Fibonacci %  pullback following the ABC up from 1.90 to 3.27. 
There is a seasonal low window in mid Aug. normally followed by an avg. 115% rally and , while it has not been much in evidence the last couple years, it could exert influence anytime especially following a sharp move down to Fib. 2.58, or 2.42.
So medium term risk of a deeper pullback as in an X wave, offering longer term opportunity for another abc up."

Got that.    
click to enlarge

It may be that the 50% retrace of 1.90 to 2.27 is only the first part of a larger pullback to say 2.43, the .618 retrace, or perhaps an "a" of larger degree within a flat correction....BUT

The c = .50 of a, the 23 yr avg seasonal low is right in here, the downward sloping trendline shown above is penetrated, and the MaCD looks like it wants to turn up.

So given the big picture....(see  Natural Gas Hits Long Term Target)  seasonal and technical support,
the avg rally following the seasonal lows of 115%, and the 13 year low in the rig count, upside risk is 
much greater than downside.

In fact, the timing is probably perfect for very long term, opportunistic plays like lease acquisition.