March 2009

I was conservative in my estimate Tuesday night and wound up raising it in the chat room to 748+. By day's end, though, the futures had outbid me, putting in a high at 753.00. That left them in good shape to try for 771.75 today, or perhaps

Today's commentary features the sage technical work of our good friend Larry Amernick, who sees speculative value in two NYSE-listed shipping stocks:  K-sea Transport Partners (KSP) and International Shipholding Corp. (ISH).  Larry has spent six years developing a sophisticated array of forecasting tools that have been remarkably prescient lately. He sees K-Sea as an arbitrage against oil prices, and International Shipping as a good bet to outperform its sector. We offer his analysis of both of these stocks as counterpoint to our usual glum view of shares in general. These are timely "buy" recommendations, and we'll let Larry, publisher of the  weekly Amernick Market Report (click here for a free sample), tell you why. Here is the report that he mailed out to subscribers Thursday night: "During the past few weeks, many in the financial media pointed to the strength in the Baltic Dry Index (BDI) as a reason to turn bullish on equities. It is true that the Transportation Sector is a leading indicator and early bull market leader. If the market was reversing its long-term and secular downtrend, then the shipping sector should be one of the leading groups. More Tankers "One of the leading experts of this industry is Trevor Jones, an economics professor at South Africa's KwaZulu-Natal University. According to Dr. Jones' latest research, the global container fleet will increase by 49%, the global tanker fleet will increase by 44%, and the dry bulk fleet will grow by 60% during the next few years. Jones believes that shipping rates will stay contained until the new tonnage is absorbed by the global shipping fleets while demand comes into equilibrium with growing capacity. "Australian Transport and Logistics News reports that the combined capacity of the containerships lying idle is 1.35 million TEU (twenty-foot equivalent unit). Because the news

From Macauley's World: For those still looking to write loans in volume, the only game in town is government-backed mortgages, mostly those guaranteed by the FHA. But unlike with subprime business, lenders in the FHA program are asked to follow agency rules requiring borrowers to document their income, put up a modest down payment and commit to live in the homes. "With the onslaught of FHA lending that's going on right now, they're bringing in lenders who are not familiar with FHA guidelines," said David Hail, a vice president of Allied Home Mortgage of Houston, one of the nation's largest FHA partners. He said the lenders are "under pressure from their builders or buyers to get these loans done. They're approving loans that they should not be." The Palm Hill Condominiums project near West Palm Beach, Fla., exemplifies the problem. The two-story stucco apartments built 28 years ago on former Everglades swampland were converted to condominiums three years ago. The complex had the same owner as an FHA-approved mortgage company Great Country Mortgage of Coral Gables, whose brokers pushed no-money-down, no-closing-cost loans to prospective buyers of the condos, according to Michael Tanner, who is identified on a company Web site as a senior loan officer. Many of the borrowers were first-time home buyers and were unable to keep up their payments. Tanner said he complained to his company that extending loans without any money down lured borrowers who either didn't understand or take seriously the payments they'd have to make. Great Country's owner, Hector Hernandez Jr., could not be reached for comment. Eighty percent of the Great Country loans at the project have defaulted, a dozen after no payment or one. With 64 percent of all its loans gone bad, Great Country has the highest default rate of any FHA

You just know how excited I get whenever this weasel wagon lunges toward $100. You could make a case that it's headed for 112.31 this time, but we've learned over time that it never gets quite high enough to gift us with the short sale of our dreams

The E-mini S&P was moderately lower in off-hours trading, but it appeared to be the kind of deftly engineered weightiness that seeks to discover the price at which relatively subdued selling may have exhausted itself. I'll be bullish when it ends,  but as of midnight EDT there was no Hidden Pivot target at which I would have you try to aggressively buck the trend.

TBT was in the throes of such a pretty swan dive Wednesday night that I thought I'd take a stab at a target: 45.52. That's a Hidden Pivot target, and its accuracy would be affirmed by signs of hesitation at or very near

Yesterday's tedious chop occurred after the futures had exceeded a peak at 723.75 recorded on March 4. The thrust created a robustly bullish impulse leg in the process, and so we should regard Wednedsay's ups and downs as consolidation, perhaps for

The downside targets given here yesterday remain valid, as do the bottom-fishing opportunities that I detailed with stops. (To find this recommendation or any other in the archive, simply search on "April Gold" or the relevant symbol.) Concerning bullish prospects for the near term,

We try to read the editorial pages with an open mind, but sometimes it's more than we can stomach to have to imbibe opinion pieces at all. For instance, there was this repellent headline atop the Wall Street Journal's op-ed page yesterday: "The Fed Didn't Cause the Housing Bubble."  Can you guess who the author was?  None other than Alan Greenspan, who during his tenure made a point of referring to inflated home values as "wealth."  He also apparently never met and adjustable rate mortgage he didn't like, probably because they were a key factor in making homes "affordable" for those who could not really afford them. Under the circumstances, for Mr. Greenspan to deny the Fed caused the housing bubble shows real chutzpah, a yiddish term for brazen effrontery. It's like Michael Corleone testifying that he knew nothing about the deaths of Sollozzo, Tattaglia, Cuneo and Barzini because he was too busy selling olive oil. Mr. Greenspan trots out a novel argument in this latest effort to gain exculpation. He asserts that mortgage rates had a mind of their own, and that the easing of administered rates by the Fed did not directly cause them to fall. While this may have been be true in the narrowest technical sense, it is undeniable that Fed-controlled rates set the pace for all types of credit. Moreover, when the Fed charted a course of easing, it created an environment in which financiers grew increasingly confident, if not to say cocksure, about borrowing short to lend long. More dangerous than the easing itself , however, was the Fed's role in legitimizing and promoting the notion that the country's obvious borrowing binge was healthy and normal. In plain fact, the borrowing grew promiscuously, because it was tied to home values that were rising much