The Market Perspective

China Housing Bust

11/14/2023

 

Here's an Update on China's Big Housing Bust
"Property market weakness is now spreading into the overall economy."

By Elliott Wave International

If you're wondering about the future value of your home or the housing market in general, you may want to pay attention to what's going on in China.

The bottom line: The way we see it at Elliott Wave International, contagion may not be out of the question.

More than two years ago, we called attention to major red flags for the Chinese real estate market.

For example, our August 2021 Global Market Perspective noted that Chinese home prices were still climbing in many sectors, but major losses were suddenly occurring in many formerly sizzling neighborhoods.

By Aug. 25, the China Morning Post said:

China's home prices are falling in districts where the most prestigious schools are located.

The Morning Post mentioned a case in point: A home sold for 42% less than a similar home in the same neighborhood just three months earlier.

So, it wasn't surprising that in September 2021, housing prices in China had hit a peak.

Fast forward to our October 2023 Global Market Perspective, which provides an update:

This chart shows [that in] September 2021 ... the China Real Residential Property Price Index completed a five wave rise from the mid-2000s. Back then, the dominant view in China was that property prices always go up. ...

Last month, [GMP] discussed some of the many ways in which property market weakness is now spreading into the overall economy.

Yet, economists have been somewhat dismissive of this threat.

Indeed, here's a Sept. 25 Business Insider headline:

China's Economic Situation Isn't as Dire as It Seems

More than that, as our October Global Market Perspective also notes:

U.S. economists naturally continue to insist that American exposure to China's weakening property prices is a non-issue.

It may not be wise to hang your hat on this sentiment expressed by U.S. economists.

There are already signs that "contagion" may be in the works.

For example, our recent Global Market Perspective provides Elliott wave analysis of the housing market for a northeastern U.S. state which is highly revealing -- call it a major warning sign.

You can see that analysis -- plus insights into U.S. markets and the economy -- inside EWI's new report "Essential Investor Insights from the November Global Market Perspective." The report is available for free once you become a member of Club EWI, the world's largest Elliott wave educational community. A Club EWI membership is also free and allows you free access to a wealth of Elliott wave resources on financial markets, investing and trading.

Get started by following this link: Essential Investor Insights from the November Global Market Perspective -- free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Here's an Update on China's Big Housing Bust. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

Wave 3 of 3 Begins

Weekend Nov 12 2023

Keep in mind the bear market got underway by January 2022. Wave One bottomed Oct 2022, Wave Two topped July 27, one of three bottomed late October, Wave 2 of 3 should be topping,ending now.That means the strongest of the waves will begin shortly.

Team Biden will be pressed to explain the  upcoming damage.

Bonds Interest Rate

TLT 20 yr bond ETF

 

This is a fourth wave rally in bond prices. It is ending now or it already has like stocks. Note PMO is extended and RSI is bending over.A recetn front page article in the WSJ reorted on the extreme volume and bets that TLT had bottomed, ie rates have topped for now..  Even Jerome thinks that way as well. If this analysis is correct higher rates lie immediately ahead.

Look at the not so amazing resemblence of CFR to the TLT chart above.

 MACD is bending and RSI has rolled over.  CFR has lost half its value at the late Oct low. Lower prices lie ahead.

Social Mood

Strikes are just getting underway with the bear market. UAW, Hollywood writers, Health care, and now Las Vegas. Below Canadian renters protest higher rents.

Politicians are trying appease both sides of the GAZA conflict form Biden to Macron to one of our House of Rep members here in SA. All are getting the same result, they just anger both sides that much more. Every Preident since Ike has tried to quell the Mid East, all have failled to this point.

 

Negative Mood Canadian Renters

11/12/2023

1968 All Over Again

11/10/23

It’s 1968 All Over Again

Crude oil WTIC peaked a year ago in June around $120-130.  It spent twelve months falling to its  200 week Moving  Average MA then in the high sixties.  A counter trend rally ensued taking price to $90.  This column has stated since that the $80 level was important, it fell this week. In fact, yesterday it fell $4.77 or 5.92% to $75.74. The next obvious test will again be the  200 week MA at  $69.93. If it holds the long uptrend from the COVID low of $10 will be intact.   This will be a important as there is a  multi-year head and shoulders pattern also suggesting an important test.

Stock prices fell from July 27 into late October. The rally since then is countertrend and will end this year. That sets up a larger down move extending into next year.

Social mood dictates social events. We have an historic mood shift unfolding now. In 1968 LBJ lost the New Hampshire to Eugene McCarthy.   LBJ decided withdrew from his campaign thrusting Hubert Humphrey, his VP, into the role. Johnson required Humphrey to embrace the Vietnam War to gain his endorsement.  By the war was unpopular.  This motivated a group later known as the Chicago Seven to arrive in the city where the Democrat Convention was underway. Their protests decimated the convention image on live television. They did not achieve a denunciation of the war but did wound the Humphrey campaign.   Richard Nixon had lost both a Presidential bid against Kennedy and then a bid for Governor of California. He rose Phoenix like to defy conventional wisdom that he was finished politically, helped in part by the   Chicago chaos.

It is now a Fibonacci 55 years later. The Fibonacci number series often defines important junctures in financial markets.  Again, we have a former VP running for President though he is the incumbent.  We already have vigorous protests against a war in Gaza only a month -old. Now as then the war has splintered the Democrat party.  Now as then the convention will be in Chicago.  We have a former President (think Johnson) who lost and is running again.  The incumbent is as LBJ was, quite unpopular in all polls.

The result was chaos in street, protests, the Tet Offensive in Vietnam, and inflation underway as  the stock  market had topped in  1968, another parallel as this market also topped two years ago.

We report this not to take a side but to warn of an impending juncture of time and social mood. 1968 was a negative mood event. 2024 looks at least as bad, get ready.

Another One Bites the Dust

Tuesday Nov 7 2023

DISH a satellite cable less provider is our latest bear market victim

4 to  3.58 in tow years, look for more of this in the next two years

and it only get worse

Th is is usually the pre cursor to bankruptcy, earnings are half what they were a  year ago, streaming, etc is changing this business

I have DISH and the bill is an absurd $175 a month no wonder people are jumping ship, we called and of course got someone who was not born here and sorta kinda learned English after a fashion over laid with their original accent whatever that was, SIGH...

 

 

BRK.B has $157 B in Cash

Monday Nov 6, 2023

BRK.B has $157 B in cash

Well that is the headline in today's WSJ so BRK rallied right, wrong

Berkshire had a  1.94 % drop in  price. the rally from late Oct was impressive and short which is what the rallies will be all the way to the eventual bottom of this bear market.

ARK

 

 

We need a close over 114 24 and we did not get it today, higher rates ahead, the fact that TLT made front  page neews in the WSJ about bottom fishing near guaranteed the bottom was not here yet

 

Bonds Seeking a Bottom

Sunday  11/5/23

Bonds are seeking a low which should last well into next year. The thirty year needs a close over 114 27.

Chart will not post Friday close was 113.72

October often has a seasonal low supporting a rally into January, did that just happen, let's watch the next two to three days

Crude oil continues to test the  $80 support level, this seems odd given the war break out but markets go where they want

Thursday Noon CST Looks like SPX headed for upper line

11/2/23

Looks like the SPX wants to test the upper line of this downtrend channel.  That is why I made the last couple of posts to show this will occur again and again.

The Merdia Does Not Get It

11/1/23

1. Finance

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2. Investing

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3. Streetwise

What Makes This Market Correction So Confusing

Even if recession is on the way, it is a poor explanation for the stock market’s slide

 

This is  a headline from James MackIntosh  in today's WSJ or perhaps tomorrow I am looking  on line.

James like most  of the so called financial advisors thinks the bear market is still alive, despite tehecarnage in the bank stocks.

BY the time they admit  it is in fact a bear market, quite a bit of money, will have been lost, see previous  post on CFR.

Proxy Stock CUllen Frost Bank

Wed 11/1/23

I am posting this two hour chart to demonstrate a feature of bear markets.This is a two hour chart. Notice the huge rally  just two or three days back, a jump of $7 in two hours.

But it did not last, NOtice the rally failed at the red 200 bar moving average line, no follow through.  Such rallies may be a result of short covering. If one sells a stock expecting a down move, one has to buy back to collect the profit.  Problems always start in the banking sector and this is a strong bank making millions of dollars. Like our downtrend channel, see two  posts ago, we will see rallies that cause the majority to think

things are still okay. This despite the obvious down turn in social mood, two wars, protests, etc.

The longer view a daily chart of CFR just over a year

It's a bear market