The Pennant Is Broken

The pennant is officially broken that I wrote about a few days ago.  I said it was forming and I thought it more than likely would resolve itself to the downside.  It has this morning as I write.  Now, the next logical thing traders are looking for is to hold the intraday lows we had recently.  So far, so good.  I will caution you though that successful double bottom tests usually don’t come this close together so even if we hold and move a little higher I’m still skeptical.

Capital Gains Holiday

The cause of all this was housing prices peaked and started coming down.  This has cause an unraveling.  Don’t get me wrong, I don’t mean the cause of the problem was housing.  I mean the crash that’s happening right now was triggered by housing prices falling.  The real cause of this was too much borrowing, too much lending, and too much leverage.

I believe they (the U.S. government) needs to enact immediately a capital gains holiday that may extend for 3 months to 6 months.  You can buy stocks and/or investment real estate with no capital gains.  Only those securities and real estate from this point forward.  If you eliminated capital gains right now, you get more selling pressure.  So, it has to be on new purchases of securities.  But, especially investment real estate.  I believe if they did that, people like you and I would go in and buy some of this excess inventory and potentially stop home prices from continuing to fall.

Let me know your thoughts.

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1 Response to “The Pennant Is Broken”


  1. 1 Mary October 24, 2008 at 6:15 pm

    Your new radio show is great and full of insightful analysis! When will your show be on iTunes like the rest of the BizRadio shows?


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