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Sounds kind of dirty, right? Actually, it's because of a clean visual that technical analysts use this term. Technical analysts like charts (hence their nickname of "chartists"), and they like to give certain patterns they see neat little names.
Such is the case with the double bottom, which looks on a chart like, well, a double bottom. Think of three mountains (on a chart reflecting a rise in values) separated by two valleys (representing dips in value). The troughs of the valleys, and the size of the first two peaks, are generally the same, so the chart looks like the letter 'W.' The appearance of those two valleys represents a double bottom.
So what? Well, if you're one of those folks who believes in the power of the charts, seeing a double bottom suggests a long-term trend is about to reverse. So, if a stock chart shows shares falling for several months, then seeing a double bottom, chances are good (according to the chartists) that the shares will rise. And vice versa.
But, beware: charts can be a great tool, but they're more art than science. Use any charts with caution.
Home / Markets / Industries / Real Estate
Wednesday, July 23, 2008
Mortgage Application Demand Drops as Loan Rates Jump
Reuters
The highest 30-year mortgage rates in a year eroded demand for U.S. home loan applications last week, according to an industry trade group on Wednesday.
The Mortgage Bankers Association's seasonally adjusted application index dropped 6.2% in the week ending July 18 to 489.6, with a 6.59% 30-year mortgage rate depressing applications for purchases and refinancing.
Average 30-year home loan rates jumped 0.37 percentage point in the week, surpassing the 6.57% rate in mid-June to match the rate posted in the July 20 week of 2007, the trade group said.
In that week last year, the MBA's total applications index was 609.0, having fallen from just over 1,000 as recently as early February.
Rising mortgage rates make it even harder to mend the worst housing market since the Great Depression.
The MBA's purchase applications index fell 6.7% last week to 335.6, and its refinancing applications gauge dropped 5.6% to 1,392.7 on a seasonally adjusted basis.
Inventories of unsold homes are hovering around all-time highs, inflated by record foreclosures.
At the same time, lenders burnt by the spate of defaults and foreclosures on mortgages made when standards were much looser have raised the bar for borrowers trying to get new loans approved.
These conditions have pressed home prices down since peaking two years ago.
Through April, house prices in 20 metro areas tracked in the Standard & Poor's/Case-Shiller index fell nearly 18% from July 2006.
May's data will be reported on Tuesday, July 29.
By another measure, home prices fell for a third straight month in May to stand 4.8% lower than a year earlier, the Office of Federal Housing Enterprise Oversight said on Tuesday.
OFHEO tracks loans purchased by government-sponsored mortgage agencies Fannie Mae and Freddie Mac, and reflect mainly lower risk mortgages.
Rescue legislation aimed at providing government support, if needed so that Fannie and Freddie can keep buying mortgages and bolstering U.S. housing, is now before Congress.
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