CHESSNOID

The US stock markets were closed today. Many of the world stock markets did well and closed up.

FTSE 100

+159.00

+2.75%

5,946.60

XETRA-DAX

+135.12

+1.98%

6,967.55

CAC 40

+90.01

+1.89%

4,861.80

HANG SENG

+517.11

+2.18%

24,276.36

NIKKEI 225

+127.86

+0.94%

13,763.26

The last 2 days were down days for the US so my guess is we will have a bounce tomorrow. The futures are all pointing up for the Dow, S&P, and Nasdaq right now. There are a couple of reports coming out and even if they are negative, I don’t think it will have the significant effect it has on the markets today. I think investors may be more desensitized to the negative news about housing, banks, etc. However, if the news is positive, then the market may skyrocket because that is news both unexpected and welcomed.

I am still all in cash, so this is a bounce I will miss out. It is difficult to sit on the sidelines in an up market but much easier when the market goes down. The technicals are still indicating we are in a downtrend in the markets I follow, so I will wait until I see it flatten out before I begin to buy. My goal right now is to preserve my capital so I can maximize my long term returns. I did sell all my equities early and avoided a substantial loss thus far.

What really looks attractive to me right now is purchasing a condo in the near term. The prices are down and I believe we are still in the downtrend of the housing cycle. Interest rates are still dropping because of the federal reserve and the white house don’t want to admit we are in a recession. There is a ton of foreclosures and the inventory grows day by day. I think banks and lenders will be willing to take low ball offers as the pressure mounts on them with every passing month from their investors.

To keep it in perspective from the collections side, these foreclosures affecting the banks bottom’s line this month were from 6 months ago. That is about the length of time to foreclose on a home for them. With the high volume they are currently experiencing the lag time may actually be much longer, and I really think the banks would rather show their losses much later than sooner. The biggest month of the crazy loans occurred in March 2006 and are to reset in March 2008. With foreclosures taking 3-6 months, and short sales occurring before the payment resets, my guess is that going into the summer months we will see the bottom of the housing cycle begin. Trying to figure out how long the bottom will last is difficult. It could take 6 months to 2 years before the bottom starts to trend back up. Possibly even longer.