Custom Search

Monday, June 9, 2008

Using Fannie Mae and Freddie Mac as Disaster Insurance (Update1)

In Using Fannie Mae and Freddie Mac as Disaster Insurance I argued that the worst of the financial fallout is yet to come.

I outlined how a simple option strategy using LEAPs (Long Term Equity Anticipation Units) on Fannie Mae (FNM) and Freddie Mac (FRE) could be used as portfolio disaster insurance.

Today both FNM and FRE finally broke DOWN and OUT… smashing all support.

In The Bank and Mortgage Index: Nothing But Trouble I argued that both indices were hovering at critical support. I also pointed out that FNM and FRE each have a 10% weight in the Mortgage Finance Index (MFX).

Today MFX finally broke DOWN and OUT… smashing all support.

The Bank Index (BKX) broke down last week. Put it all together and you have a general confirmation of the much larger break DOWN and OUT of the S&P500 (SPX) from a Rising Bear Wedge.

While equities may find the strength to bounce every now and then, the trend is and remains down.

Related Posts:
This Bear Market Rally is Over: EURIBOR Rises Again
Bear Wedge Breaks, Goldman, Lehman, Merril, Morgan: Cut to SELL

5 comments:

wunsacon said...

Page hits probably tell you people derive value from your site. But, let me follow that up by saying "thanks" for the education.

John Gersh said...

Interesting observation. Many do not know how Freddie and Fannie work, or why. The Wall Stree Journal Online had a very interesting explanation, I posted about it here http://themortgagerefinanceblog.com/2008/06/12/how-freddie-mac-and-fannie-mae-work/

Sneakers hobbies said...

nice post!!
We do kinds of casual clothing wholesale online, welcome to visit!!
Polo Shirts On Sale
Cheap Polo Shirts
Burberry Polo Shirts
ski jackets
The North Face Clothing
Mens ski jackets
Womens ski jackets
Ralph Lauren Polo Shirts
men's down jackets
cotton polo shirts
polo shirts
cheap polo shirts
discount polo shirts
polo shirts wholesale
womens polo shirts
mens polo shirts
polo clothing
polo long sleeve shirt
short sleeve polo shirt
long sleeve polo shirts
embroidered shirts
discount north face jackets
winter jackets
short sleeve polo shirt

Anonymous said...

Colby CacciolaAleida BasoreAldo SchrantzTracie BouviaNathan BrundinPercy KohlGrant NardozziWillis SopkoCletus BarisWendell LegroHouston KellmanUn Schlott

Super Bowl Commercials 2012 said...

Thanks for the post. I liked it. Keep going I follow you.
Super Bowl Commercials 2012| Money Talks|