Replies to post #53109 on Value Microcaps Motherboard

[lentinman]

MIKES: BMRBOY:

Not only is that a great chart and one I reposted on RUBBLE, but CNBC actually showed that very chart today on Kudlow and company (less Kudlow)!!! And, if it wasn't today, it was yesterday.

MIKE: I don't see any reason to be critical of the chart. Yes, it is true that the parameters are different (meaning an upper limit), but that isn't relevant IMO. The issue is how do the two charts correlate with respect to each other WITHIN the parameters that each has. In that case, it is what it is.

Thanks for finding that old data. I may create my own chart going back to 1985 and overlaying the two (SP5 lagging 1 year) to see if the correlation holds before 1996. Of course the historical NAHB data that you presented is monthly and the chart has data points of at least weekly, if not daily. Still, using monthly should be reasonable in terms of a correlation (if one exists).

Obviously, one would have to assume there is no previous correlation to 1996 or else they would have shown it farther back.

Len

[lentinman]

BMRBOY: MIKES: TMCAL:

Ok, this isn't going to work. DUHHHH The "duh" is my own temporary stupidity!

The reason it works (see below) - and the only reason it works - as an overlay from 1996 to present is simple. BECAUSE THE S&P 500 IS RANGEBOUND!

Mike's concern (although not mine from 1996 to present) is THE issue from 1985 to 1996. Clearly, you can't overlay the two before that! The housing index is going to range from 40-80 always - whether from 1985 to 1996 or from 1996 to present - or any other window of time. But, the S&P was 200 (!!!!) in 1985. Imagine where that puts it on the chart below.

I played around trying to determine if you could see a correlation even though the S&P slope was rocketing up at 30 degrees, but I couldn't see any. I also tried to increase the housing index line with a linear rate of change, but would still show the changes month to month, but that didn't work. Part of it was that I couldn't get it right.

I'll keep playing with it. If there is something I can do to adjust for the fact that the SP5 went up from 200 to 800 from 1985 to 1996, and force the changes into a rangebound visual chart, I will let you know. Otherwise, I can't see anyway to overlay the two.