Dead Cat Bounce
From the DJ wire - no link
1:56 p.m.: Home builders are seeing their shares rally Monday, and many who cover the industry are saying today's numbers from the National Association of Realtors indicate the market may have bottomed. "We disagree," said Bob Hynes, senior market analyst at IFR Markets, a division of Thomson Financial. "This is not the first time we have heard an industry group claim that the market has bottomed. It is also the umpteenth time we have heard that shares are attractively priced."
He pointed out that shares for every one of the 12 home builders IFR follows were trading higher. Pulte Homes was up 2.3%, while KB Home and Toll Brothers each added 1.6%. All three are trading above the 52-week lows they hit in June -- when "there were many more people than now claiming that the housing downturn would be brief," Mr. Hynes wrote in a note to clients warning of a "dead-cat bounce" in the home-builder shares. "Since that time, most home builders have reduced their earnings guidance (some of them multiple times), and the major players are predicting poor conditions well into next year," he wrote.
1:56 p.m.: Home builders are seeing their shares rally Monday, and many who cover the industry are saying today's numbers from the National Association of Realtors indicate the market may have bottomed. "We disagree," said Bob Hynes, senior market analyst at IFR Markets, a division of Thomson Financial. "This is not the first time we have heard an industry group claim that the market has bottomed. It is also the umpteenth time we have heard that shares are attractively priced."
He pointed out that shares for every one of the 12 home builders IFR follows were trading higher. Pulte Homes was up 2.3%, while KB Home and Toll Brothers each added 1.6%. All three are trading above the 52-week lows they hit in June -- when "there were many more people than now claiming that the housing downturn would be brief," Mr. Hynes wrote in a note to clients warning of a "dead-cat bounce" in the home-builder shares. "Since that time, most home builders have reduced their earnings guidance (some of them multiple times), and the major players are predicting poor conditions well into next year," he wrote.
posted by Little_Silvered at 7:18 PM
1 Comments:
In June everyone thought rates were going to be 5.75% by the end of the year. Now it looks as if the Fed might be done. If the Fed is done or actually starts to ease again to avoid a recession, builders shares may hold firm here or even increase. The share prices of the home builders may actualy be a leading indicator in the end for home prices.
I am not saying that prices aren't lofty or that the price and housing boom will continue, but as far as home builders go, the worst may be behind us...
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