by: yuri111 07/31/02 11:40 am
Msg: 4635 of 5228
TXCC keeps ticking up, currently 97 cents, up 45% from my average vs 20% loss in NASDAQ in the same time.
Yep, Value wins.
Yes. So? Where is the contradiction?
TOL's homes are sold to the upscale populace. Their purachsing power is less sensitive to interest rates and more sensitive to stock market, executive compensation, stock options, bonuses, loss of high paying tech jobs, squeezed margins at various small and medium size businesses --- in other words to what is currently happening. For many of them salaries aren't the chief sourse of income, so they are getting killed by the current enviroment.
BZH homes target lower income population who rely more on their combined salaries for their purchasing power, so their purchasing power is interest rate sensitive. Rates aren't going up any time soon.
The current enviroment is beginning to hurt upper middle class more and more, so TOL is going to hurt more than BZH.
I made a similar call last Tuesday when the VIX spiked above 56 (on SI). I said the bottom for the Dow was 7550 and that 1200 basically did it for the Naz. Dow touched 7537 intraday on Wednesday, I believe, and Naz briefly went into the 1l95 range (for about a nano-second).
We're looking at, imho, an upside for the Dow at 9600, minimum, this month (August) and I'm fairly confident that the higher beta Naz will get to 1725. Beyond that, it will depend on how far the market wants to overdo it, but I will be in cash by then, so God bless.
October numbers will be (drum roll) Dow of 6000 (touching intraday 5980s or so) and a Naz of 1000 (touching intraday lows in the high 900s, causing much swearing and panicking).
What stocks do you like here for the long side?
Yes, I agree, there will be a next down leg. I am not going to call it, though. And I am not going to reshort at this point.
If I miss it so be it. I believe my call for a market bottom stands as well as for 30% NASDAQ upside. I feel i am making more money on the long side.
I think 8/14 is the near term catalist and as more corporations sign their books the more relieved the market is going to be.
As a short I would also favor TOL over BZH but for different reasons than you.
1) TOL reported decrease in average selling price vs BZH's increase
2) Crappy stock market hits upscale more than first-time buyers while riaing rates do otherwise
Since i no longer see a near term threat of higher interest rates but do see another downleg in the market come Sept/Oct, TOL would be my choice over BZH.
Back to basics, I see BZH falling from here. The daily and weekly charts show this little rally just about gasping out here.
I'm looking at BZH to drop on this next hard dip to 44, a 40% move, but I see TOL capable of dropping to ~14, a 65% move.
Do you have a view?