Saturday, May 06, 2006

When will the rise in interest rates peak? To answer this $64,000 question I had to look no further than my mailbox yesterday afternoon. A mortgage broker sent a mass mailing to me (presumably because my Home Equity Loan company sold him the mailing list) demanding that I lock in my prime based adjustable Home Equity Line of credit to a fixed rate. In bold 16 point type the letter stated, AFTER 15 STRAIGHT RATE INCREASES ISN'T IT TIME YOU DO SOMETHING ABOUT IT?? THE NEXT INCREASE WILL BE IN MAY, WHAT ARE YOU WAITING FOR? The ad goes on, "The Federal Reserve has increased rates 15 straight times in the last 4 years with no end in sight.....Most experts believe more increases are on the way."

I never got a letter from this guy after the first increase, or the the fourth or the seventh or the eleventh. Now I get one. Guess what? Rates will stop going up in the next 60 days. Case closed.

Tuesday, May 02, 2006

"Sell in May and Go Away" I usually hate these wall street nursery rhymes. They are too cute and they seldom work. But this time, I believe that sometime in May will be the best sale of the year in the market. There are just two many things that could stymie the economy--interest rates, oil, Iraq, Iran, the fall of the dollar, rising commodities, etc. But one should look no further than the recent action of the NY Stock Exchange Group (NYX) which went public two months ago. Its down 30 points from the high and has given everything back from the time it first acquired Archipeligo. Conspiracy theorists would say the best time to sell would be after Thursday when the NYX completes it secondary offering. Regardless it is never a good sign of a healthy market when its feature IPO falls on its own weight over a mere two month period. The last time this happened was when ATT Wireless (AWE) failed to hold its IPO price in the year 2000 and we all know what happened next--- a 2 1/2 year bear market. The telltale signs here will be an S&P close under 1300 then under 1245 and if that happens, sayonara baby.