Facebook Short Update, Home Builders, Lumber, Nikkei

Recently we suggested shorting Facebook.  In the four trading days since, the NASDAQ is up over 1% while Facebook is down 6%.  Note that Facebook is now almost at its historic trend support:

 
We expect that trend to fail with the stock eventually printing new all-time lows, however booking at least some of such quick gains should be considered. 


This bit of news today was not widely reported, perhaps due to its very bearish implications:

"Home builder D.R. Horton Inc. (DHI) declined 4.6%, among the worst performers in the S&P 500. PulteGroup Inc. (PHM) fell 3.3% and Lennar Corp. (LEN) slipped 4.4%.

The weakness in the sector comes after news that the number of mortgage applications fell 9% last week as refinance applications decreased for a third week and interest rates jumped to their highest level in a year."

Looking at a chart for lumber prices suggests perhaps the news shouldn't have come as a surprise:

What definitely should never come as a surprise is that what goes up comes down, and when it comes to equities and commodities it usually comes down much faster than it went up. 

Eventually something similar will happen in domestic markets.  For now we can use the Nikkei as an example, down 15% in just a few days:

For months the Nikkei traded within a rapidly ascending trend channel, shown by the red lines, and that massive run seems to have ended with a classic "throw-over" the upper trend line and it's now testing the lower line for the 3rd time since November.  This is action worth keeping an eye on.


Some articles worth considering:

Yet another reason to be scared: Consumer confidence index is a contrarian indicator

Senior citizens struggle with mounting debt

4 ways the end of QE will surprise everyone






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