Loading ...On Saturday we at Alphas Edge wrote an article how incompetence was leading the market higher. Within this article we wrote, “The most ridiculous of the move was LEN, the worthless homebuilder stock (great shorting opportunity) now at 16 bucks a share (worth maybe negative 35 cents).” Like always, we were ahead of the pack.
http://www.alphasedge.com/stock-market-news/incompetence-carries-stock-market-higher
This morning, LEN was down to $15.24 a share, a 12% drop from Friday’s average value. The cause of the move was the $171.6 million, or 97 cents a share, on revenue of $720.7 million for the third quarter ended Aug. 31. No doubt, Wall Street is finally realizing that there isn’t a big enough housing industry left to maintain all of the homebuilders from the peak market in 2006 at same evaluation levels. Either some major homebuilders will need to go bankrupt or investors will have to be content with decades of lagging profits from homebuilders.
On a side note, the dollar is gaining a little strength today as the market has a slight sell off. This might or might not be the start of the correction. There was no change in policy or condition that would send the DOW down. More importantly, the financials are actually up! For the last year, they have been the clearest market leading indicator. Will this continue indefinitely, most likely not, but for now, one can only assume the market will still glide higher.
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