Our technical analyst Cory Venable gave me an interesting picture this week of relative risk and reward in the S&P 500 today. Dividing the VIX (Volatility Index) by the price level of the S&P 500 Index, we can see buys were triggered for "a trade" in both November 2008 and March 2009. What is interesting now is that with stock prices about 50% higher than March and volatility about 70% lower than the highs of last November, this risk ratio has recently been ticking up again. A third test of the dotted trend line may present another buying opportunity ahead.

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The number of wealthy individuals and families filing for bankruptcy jumped 73 percent in the second quarter from a year earlier, according to the National Bankruptcy Research Center. See: Bloomberg: Wealthy Families Face Bankruptcy

"Wealthier people filing for bankruptcy typically have large homes, two car payments and children in private schools, said Leslie Linfield, executive director of the Institute for Financial Literacy in Portland, Maine, a credit-counselling and research group.

“You’re living on the edge, you’re juggling those financial balls,” Linfield said. “When one ball goes, they all fall down.”

Listings of homes for sale worth $1 million or more increased 27.3 percent in July from October, according to Zillow.com, a Web site that tracks real estate transactions. The number of homes sold with a value between $1 million to $2 million fell 23 percent in July from a year earlier, according to the Chicago-based National Association of Realtors. There was a 21-month supply, up from 16 months last year."

This is US data but the spike in bankruptcy filings across all socio-economic groups is up all around the world...   more »

Meredith Whitney, founder and CEO of the Meredith Whitney Advisory Group, discusses financials and the state of the credit market on CNBC. Two things I appreciate about Whitney are her ability to explain the interconnection of banks, credit, housing and the economy in a common sense way; and the fact is that she is now given lenghthy time for her interviews which allows for a fuller explanation of her thoughts.

Bottom line:

Nothing fundamentally has changed with the banks. The government intervention has just kicked the can down the road. She expects another major leg down in the stock market:




And "There's no doubt that home prices go down dramatically from here.":...   more »