Bank of the Cascades, along with many of its fellow financials and for good reason, has been just crushed this year. After breaking down again this fall, the stock has now been cut in half from the highs it saw roughly a year ago. The chart below is an update from the one I posted the last time I wrote about the stock:

Although it hasn’t quite reached my target area there are signs it may be ready for at least a counter-trend bounce.

Technically, the daily chart looks oversold. While the stock has recently made new lows, Money Flow, MACD and DeMarks (some of the most potent technical tools in my tool box) have diverged:

In other words, the waves are still coming in but the tide is starting to go out. Friday’s bullish reversal (making a new low and then closing positive) is also a sign that the stock may be ready for at least a breather.

In addition, the weekly chart shows that this latest move down has now reached symmetry with the stock’s first move off its highs. (I subscribe to the idea that the market, like any natural system, strives for symmetry in a multitude of subtle but visible ways.)

Finally, the short interest in the stock is a huge 32 days. It may only take the slightest bit of buying interest to spook the shorts into buying back the 5 million shares they have sold. Add in the fact that insiders have been judiciously buying over the past couple of months and you’ve got a pretty explosive recipe. Indeed, some of the most vicious rallies I have ever witnessed were born this way.

This doesn’t change the fact that the bank’s financials are deteriorating and will, in all likelihood, get much worse over the next few quarters. All I’m saying is this dead cat may have just hit a trampoline.
LIV

Bank of the Cascades, along with many of its fellow financials and for good reason, has been just crushed this year. After breaking down again this fall, the stock has now been cut in half from the highs it saw roughly a year ago. The chart below is an update from the one I posted the last time I wrote about the stock:

Although it hasn’t quite reached my target area there are signs it may be ready for at least a counter-trend bounce.

Technically, the daily chart looks oversold. While the stock has recently made new lows, Money Flow, MACD and DeMarks (some of the most potent technical tools in my tool box) have diverged:

In other words, the waves are still coming in but the tide is starting to go out. Friday’s bullish reversal (making a new low and then closing positive) is also a sign that the stock may be ready for at least a breather.

In addition, the weekly chart shows that this latest move down has now reached symmetry with the stock’s first move off its highs. (I subscribe to the idea that the market, like any natural system, strives for symmetry in a multitude of subtle but visible ways.)

Finally, the short interest in the stock is a huge 32 days. It may only take the slightest bit of buying interest to spook the shorts into buying back the 5 million shares they have sold. Add in the fact that insiders have been judiciously buying over the past couple of months and you’ve got a pretty explosive recipe. Indeed, some of the most vicious rallies I have ever witnessed were born this way.

This doesn’t change the fact that the bank’s financials are deteriorating and will, in all likelihood, get much worse over the next few quarters. All I’m saying is this dead cat may have just hit a trampoline.
LIV

By now, everyone and their mom knows that oil has been skyrocketing recently:

Perhaps you’ve even heard about gold’s latest runup:

The markets are screaming, “inflation!”

Or are they?

In stark contrast to these two commodities are the recent movements of interest rates. In an inflationary environment, bond investors expect greater yield. Bonds investors, however, have recently been so eager to buy bonds they’ve pushed yields down near historic lows:

Have the bond vigilantes retired? Are gold and oil speculators the new inflation vigilantes?

I think the jury is still out for now but there is one other commodity, an historically rather important one, that is suggesting the bond boys may have it right.

Dr. Copper (PhD in Economics) has not followed it’s brother commodities, oil and gold, to new highs:

In fact, it looks to me like it may have put in a long-term double top. And if Dr. Copper isn’t all that worried about inflation, I’m not gonna fret about it either.

As for deflation, the kind that is currently being painfully witnessed in the real estate market, that’s another story altogether…
-LIV

By now, everyone and their mom knows that oil has been skyrocketing recently:

Perhaps you’ve even heard about gold’s latest runup:

The markets are screaming, “inflation!”

Or are they?

In stark contrast to these two commodities are the recent movements of interest rates. In an inflationary environment, bond investors expect greater yield. Bonds investors, however, have recently been so eager to buy bonds they’ve pushed yields down near historic lows:

Have the bond vigilantes retired? Are gold and oil speculators the new inflation vigilantes?

I think the jury is still out for now but there is one other commodity, an historically rather important one, that is suggesting the bond boys may have it right.

Dr. Copper (PhD in Economics) has not followed it’s brother commodities, oil and gold, to new highs:

In fact, it looks to me like it may have put in a long-term double top. And if Dr. Copper isn’t all that worried about inflation, I’m not gonna fret about it either.

As for deflation, the kind that is currently being painfully witnessed in the real estate market, that’s another story altogether…
-LIV

I recommend everyone involved in the local real estate market spend some time meditating over this question.

The Oregonian reports today (thanks, Duncan) that of the 29 Bend homes that builder Buena Vista Homes put up for auction this weekend, exactly zero sold.

I wonder if the fact that Bend is still the most overvalued housing market in the country (thanks, Missy) had anything to do with it…
LIV

I recommend everyone involved in the local real estate market spend some time meditating over this question.

The Oregonian reports today (thanks, Duncan) that of the 29 Bend homes that builder Buena Vista Homes put up for auction this weekend, exactly zero sold.

I wonder if the fact that Bend is still the most overvalued housing market in the country (thanks, Missy) had anything to do with it…
LIV