Tuesday, March 08, 2005

Subprime Loan Stocks Break Resistance

The web site Quamnet.com posted an article by Mark Faber today which included his thoughts on the building and finance sectors. Scroll down to Figure 3., and you will see that the stocks of big subprime lenders have broken below resistance.

Regular readers know I expect a cascading break of the various housing bubble sectors. For example, see the current blow-off of home builder stocks (Figure 4)months after the mortgage co.s top in the fall of 2004. Fig. 4. also includes a nice side-by-side comparison to the Nasdaqs' parabolic rise and fall.

Faber says,"(A)ll financials including Fannie Mae, and mortgage, credit card and sub prime lenders, and providers of financial guarantee products such as Capital One Financial (COF), Countrywide Financial (CFC), Accredited Home Lenders (LEND), New Century Financial Corp (NEW), MBIA Inc (MBI), MBNA (KRB) appear to be rolling over. JP Morgan Chase (JPM).. heavily exposed to derivatives - is also not performing well."


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