Housing Starts and Building Permits

Housing Starts and Building Permits

Tuesday’s report could send the market into a tailspin. Short-term traders need to watch the daily signal lines. I posted a chart for long-term traders on the title page of this group. The green signal lines and red may cross if negative news comes out about the housing market. I feel that inflation fears are under estimated, once the Fed begins to raise rates, inflation will be compounded. The Fed has never been ahead of the curve with inflation or deflation. Oil will be at $45 per barrel by Memorial Day, and $54 by the Fourth of July. Going into the heart of the summer, buyers will be reluctant to risk going long stocks.
The China connection to inflation is still under the radar of most investors. The Chinese economy will drive the price of oil higher, while they are saber rattling against the primary chipmakers, the Taiwanese. The U.S. warning was issued after China, just days before Taiwanese President Chen Shui-bian starts his second term, threatened to crush any steps towards independence "firmly and thoroughly at any cost."

The Chinese imports of oil have increased as much a 1/3 over the last year. They are stockpiling oil supplies when A) they go to war with Taiwan, and B) if the Iraqi war becomes a chemical battlefield. As a side benefit of their increasing demand for more oil, our gasoline prices will skyrocket this summer. Even if they were not increasing their demand for oil, the U.S. is incapable of meeting our own demand due to environmental concerns restricting any new oil refineries being built.

For traders, a good time to make money on the low volume this summer by trading options using a straddle or spread strategy. When trading low volume days, be sure to take note of the daily signal lines, sharp reversal can occur when crossing these lines.


Also, there were 5 sunspots facing earth yesterday, watched solar radiation spike to one of it’s highest levels during the India’s stock market collapse. Today there are 6 sunspots facing earth. Either up or down on Tuesday, it should prove to be volatile day. For those who want to know more about space weather go to: http://www.spaceweather.com/

Lastly, option expiration this Friday.


God Bless

Doc