It's An Ugly Market Ahead

The 300 point rally from last week is now completely erased as credit losses mount at Citigroup. Citigroup's total write off is now approaching $26 billion dollars. Or roughly half of the United States monthly trade deficit.

The real story today is about the homebuilders. The XHB has now broken through the most recent low. Expect to see some of the builders going out of business in the next 2-3 months. This time is different than last time housing was in a slowdown. Even if interest rates drop to 1% again, no one will be able to get access to easy money. The homebuilders are in a death spiral.

Many are in an every day struggle to stay alive.

Do not believe the talking heads on CNBC. This is not going to end for a few years. If you have an option account. I suggest long term puts on commercial real estate and the home builders listed in the above article. Otherwise, do not go bottom fishing in a market where the fish will bite back.