New Orleans re-building plus more - emailed to subscribers
Tue, 13 Sep 2005

Here is a small quote from a book I am currently using as a reference for the 1974 - 1991 18 year real estate cycle. It sort of jumped out at me. The quote is describing the banking deregulation that went on after 1980 in a Reagan led US economy, but i think you will see its relevance to today at the end.

"Deregulation was not new to Texans. They had significantly liberalized regulations for state chartered banks in 1972 and again in 1981. In addition, banking had for years been done differently in Texas. Typical features of the state banking business included risk-taking, wheeling and dealing, and domination by an old-boy network that had close ties to the most powerful Texas politicians. When oil prices went from $7.64 per barrel in 1975 to $34.50 per barrel in 1981, the Texas economy boomed, building permits quadrupled, and Texans thought they were invincible."

You might note that is 30 years ago, and banks fueled a feeding frenzy on the ever increasing real estate prices, based on an oil price that seemed to be going only one way - up. It did of course turn eventually. A repeat is underway currently you can be sure.

These emails are sent as an extension of classes so that participants can see the Gann stuff as it unfolds in front of you. Here is a stock to do just that:

bso has made what looks like a high, Sept 8. This gives you the date to be watching for December, 90 degrees later, as a high, and sell point as the stock goes ex div. (See also how this relates to prior Decembers). Now we watch for a good buying signal - break of sideways move next month say, or good date for a low 30 degrees from sept 8 say, or whatever else develops. Just watch how the pattern unfolds, and strategise from there. The stock tops out every June and December, 180 degrees apart. Do not hold for the dividend.

I hope you have all managed to study the price overbalance on jbm, Aug 16 down to Aug 19. This was one of Gann's greatest insights into the behaviour of markets. A retracement to the mid point usually takes place after this. May and September are low months for this stock. All good gann stuff. The longer term (weekly and monthly) trend is still up however. In a perfect world, it would be nice to see Rinker, rin, do something similar in about two year's time, to tell us that US building activity is leveling out, (the market should see this via earnings, and price it in beforehand) in time for US land prices to do the same a year after that, then ready itself for the inevitable bust after that. Mere speculation so to speak at present, we will have to see what develops.

Money looks to me like it is starting to flow back into bio tech stocks after quite a drought and down or sideways moves, and recently, some overbalances to the upside. Reviewing a list of such stocks would be useful at this time - see what you think yourself and act accordingly. (bno, bit, cmq, eif, ept, mbp, to name a few of interest).
These stocks are spec's though, not investments. And there is also a lot of rubbish in this sector, so don't let that fool you either. And of course we continue to ignore any stocks with prices still below their moving averages. Perhaps confirming the revival however, may is back in the new highs list... Don

't force trades when the stock you are charting - jum - goes listless. Watch and wait, and follow something else meantime. Have the property developers now had their larger time frame (monthly) mid point retracements, with 2001 as the base ?
eg, twd, vwd, alz
more trend up in my view, but slowly

other news
Some very interesting writing out of the US the past week as we commemorate the 48th month of 9/11.

See also in the same paper the article "Taking stock of the forever war" by Mark Danner. This perhaps gives us a reason why melb gets a reference as the new target. (Should I come back ?)

See also the Washington Post, "9/11 and counting" Read them with counting dates in mind.

The commemoration for 60 months will be much larger and more noticeable than this one just gone. 5 years. Gann picked this up as operative for stocks as well.

As to the New Orleans events:

You will recall that I have been suggesting for some years that the US real estate cycle has to run approximately 18 years and that events will happen to make that so. Now the building of temporary shelter cities will take place, (awarded in no-bid contracts to big donors to past Bush campaigns I might add) then the rebuilding of New Orleans itself. Good signs of a peak in the making. The Fed will have to accommodate this by not lifting interest rates too much, the last thing they want this year or next is a rate induced slowdown.

Meanwhile, the looting of the state by companies like Halliburton goes on. Anyone like a peace activist trying to bring it to a halt is arrested under new anti-terror laws. What are we really being protected from ?

and finally, a golf lesson:
I saw a report the other day, despite the use of balls that fly farther than ever before, materials making irons lighter and easier to swing, ergonomically engineered putters to strike and roll the ball more precisely than before, more and better maintained gold courses, instruction more affordable and more plentiful than ever, larger woods (now metal as well) with even bigger alleged 'sweet' spots, and now even a better tee redesigned to allow the ball to soar longer and straighter, the average score for all golfers playing 18 holes has not changed. For hackers like you and me that average remains around 100, as it has for decades.

Say the pros: "We are all still walking a round of golf with the same mental demons" Traders can relate to that one. "A 4 foot putt to win remains exactly that, 4 very long feet..." As any golfer will tell you.

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