ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Housing Market Intro/Summary The stocks of home builders are starting to fail their moment of truth. A Moment of Truth Looming Ever Larger On October 25th, the iShares Dow Jones Home Construction ETF (ITB) hit a 21-month high that coincided exactly with a major multi-year peak and post-recession high from January, 2018. The sellers showed … Read more
Overall Assessment I am bullish on Lennar (LEN). The company’s Q3 2019 earnings report featured the effects of an on-going pivot to serve the entry-level market and to deliver lower-priced homes. Average selling prices came down, but deliveries, orders, revenues, and margins all improved. A “land light” strategy is helping Lennar increase its cash coffers … Read more
Housing Market Intro/Summary In my last Housing Market Review, I finally conceded to a sustained rally in the stocks of home builders. I noted how this stubborn rally moved counter to unimpressive data. In September, several data points finally came together to support the strong sentiment in financial markets. Low interest rates dominate the story … Read more
While the market was going wild buying call options in Toll Brothers (TOL), insiders were selling large quantities of shares. SEC filings reveal almost $2.8M in share sales. Here is a summary with emphasis on the CEO and President (note I mainly care about the sales transactions of C-level executives and SVPs and not board … Read more
The Pairs Trade Exactly one month ago, I pointed to a pairs trade using put options in Toll Brothers (TOL) and call options on the iShares Dow Jones Home Construction ETF (ITB). Home builders selling affordable and otherwise lower-priced homes were rapidly gaining favor. Toll Brothers, a builder of luxury, high-end homes, was greatly under-performing … Read more