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Bernanke : Commercial Property May Pose Risk for Economy

Jul 23, ’09 12:54 AM

Commercial real estate could be the next catalyst for a major market correction….. (according to Bernanke).

Among the key points noted:

1. Commercial market is potentially bigger than the residential market (hence, a much larger problem here)

2. Increased vacancy, declining rents, falling prices. That almost sum up the 3 pillars of real estate. If all of them are still falling, then we have not seen the bottom yet. It is still falling. Companies are still not hiring. More restructuring are going on.

3. Which leads me to the third point. Debt ratio. Essentially, now is the worst time to go ‘long’ on property related stocks (including REITs). Lots of them are highly geared and with falling demand, prices and rents, it is extremely difficult for them to increased revenue. I am not sure how they are going to raise the funds to pay. But, I see a possible repeat of GM, or CIT.

4. At some point in time, the musical chair party will stop. And some will no longer be with us. So, do be careful out there.

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SPX : Heavy resistance ahead (as of 21 July)

Jul 21, ’09 7:43 PM

Yesterday, S&P 500 tries to break through and establish a new high for the year.

A key point to note is that it lacks heavy volume. Perhaps, this signifies the overall market sentiments. The market is just not ready to be bullish yet at this point.

On the Daily Chart, we can see that it seems that Tenkan sen is going to cut Kijun sen on the Ichimoku chart. But, on further inspection, we can see that the forward (or leading kumo) is thinning out.

And a thin kumo is the equivalent of thin support. With the kumo so thin, there is just a chance that if there is a correction coming, it may come very fast and fall very quickly.

On the Weekly Chart, we can also see that it is slamming right into the kumo. Unlike the Daily Chart, the kumo on the Weekly is thick; a sign of strong resistance moving forward. The kumo also suggest resistance all the way till S&P is at 800.

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3PAR (PAR) : Issue Revenue Warning

Jul 20, ’09 2:21 PM

3Par issues revenue warning recently and with that news it gapped down hard from 11.45 to 9.68

I was caught off guard. A huge mistake on my part as I have not been reviewing its daily chart for some time.

A closer look will review that there is a danger on July 8 as the price fell and cuts the Kijun sen. A signal that should have flagged off and tell me to take my profit and walk away.

With the gap down, needless to say, the Daily Chart also exhibit a bearish Tenkan sen – Kijun sen cross. (>> me: Needless to say, I cut my position the moment I saw this news.)

On the Weekly Chart, we can see that the kumo is thinning out; probably a suggestion that the demand for the stock is going down as well. With thinning kumo as support, it will suggest that the support level is weak below the current price level.