Is Worst of Subprime Market Behind Us?

Is the worst of the subprime market behind us? Bill Carrigan seems to think so. Let's see what the charts say.

PHLX HOUSING SECTOR INDEX - $HGX

Monthly chart shows the index has retraced to the .886 fib level in January 2008, where it found short term support. The high of the index was indeed made in July 2005, and prices have been falling sharply ever since. The index continues to remain weak, despite having made a bottom in January 2008. No buy/long signal/pattern evident on this timeframe.

Weekly chart shows resistance and continues to be below the down trendline in place. Index is below all its key moving averages.

Daily chart shows consolidation/trading range, with a test of high made, where bulls were soon overcome by bears. Look for continued weakness and test of the low and lower. The rebound noted by Bill Carrigan is just short term support. The pattern suggests lower, and the selling is NOT done yet.