With all gloom and doom among homebuilders, Lumber futures technical pattern says housing bull is here
Peter oberois
Jun. 20, 2007

The gloom and doom among home builders have skyrocketed in recent days. The homebuilders continued to cut production last month as they struggled to pare bloated inventories.

Housing starts fell 2.1% in May to a seasonally adjusted annual rate of 1.474 million from 1.506 million. It was down 24.2% from a year earlier and 35.7% from their peak rate in January 2006.

But lumber prices correlates very nicely with lagging housing market. Simply put, lumber market is sensitive to what is happening internally in the housing market. The lumber future technical chart pattern manifest accumulation by the commercial. It is a sign somewhere lumber is getting used heavily. It is a scarce commodity. The depletion of forest all around the globe makes the commodity valuable especially in a housing boom environment.

Based on sentiment indicators and the technical chart pattern, the housing boom is coming back. Most likely what will happen is that low end workforce will get into new homes with interest only, no down, no payment for six months, balloon mortgage loan. That will be essentially catastrophic – the sub prime problem will look nothing compared to this one. These buyers will foreclose eventually with a year leaving the whole housing market in shambles.

For now it is the time for the flippers. Buy homes for low and sell them to those who cannot afford a mortgage.

With all gloom and doom among homebuilders, Lumber futures technical pattern says housing bull is here
Peter oberois
Based on sentiment indicators and the technical chart pattern, the housing boom is coming back. Most likely what will happen is that low end workforce will get into new homes with interest only, no down, no payment for six months, balloon mortgage loan.
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