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 Strategies & Market Trends : The Millennium Crash

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To: Arik T.G. who wrote (5631)2/1/2005 11:31:04 AM
From: Arik T.G. of 5635
 
Warning sign:
Apartment REITs are going down

Look at EQR ASN and AVB, the pillars of apartment REITs.
They lost in one month more then they gained in the previous two months, and over half the gain of the entire leg up from the April 2004 low.

The reason REITs are going down is expectations that the housing market will weaken.
Wether it's because expectations are for a LT yield to rise, or because a general weakness in purchasing is expected, I don't care. The thing is the housing market was the main engine in getting out of the 2001 recession, and other sectors have not taken the reigns since.
If the main engine falters, there will be nothing else to keep the economy from spiraling down.
And indeed the recent data show that although housing starts datum remains very close to its high, the new home sales number out yesterday was a bad surprise and pulled the 8 month MA lower. It would be very difficult now to pull that MA back up without some very strong numbers, in the neighborhood of the failed expectations from the recent datum.

ATG
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