We called for a bull market in St. Joseph’s statues back in early 2006, right after a key housing index broke to a new low. For an important update of that index’s latest move be sure and check out this month’s issue of The Elliott Wave Financial Forecast.
Housing is such a big story at this critical juncture that, in retrospect, it will probably be viewed as the root cause of a much larger decline. Afterall, housing was the first sector to bring many of the most nettlesome issues of the bear market to light – stuff like SIVs, CDOs and a whole alphabet soup of derivatives. But the truth is the same as ever. It’s all about a shift in social mood, which had to start somewhere. Since residential real estate (red line on the chart below) is the only thing bigger than the U.S. stock market (green line), it makes perfect sense that it was the first to fall.
When commercial real estate (blue line) is figured in, real estate is actually quite a bit larger than stocks (at least for now).
As the pie chart shows, it’s also the biggest slice of the debt market, another critical area that’s plays a lead role, in the unfolding drama and this month’s issue.
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