ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
While the month of August was full of sharp trading action which left the S&P 500 (SPY) trapped in a trading range, home builders emerged stronger. The 4.8% August gain for iShares Dow Jones Home Construction ETF (ITB) far out-performed the S&P 500 (SPY) which languished with a 1.8% loss. Ironically, the stock market’s small … Read more
The grind played out for about 5 months – including a sell-off in June ahead of earnings. Now, KB Home (KBH) finally managed to break out to a new high for the year. KB Home (KBH) finally joined the growing list of home builders breaking to prices last seen last year and earlier. KBH is … Read more
With just one day to go until expiration of the short side, my Aug/Oct $39 calendar call spread on the iShares Dow Jones US Home Construction ETF (ITB) hit its initial profit target. I was hoping the short side would expire worthless, and I could ride the long side expiring in October into the launch … Read more
Overall Assessment I am neutral on KB Home (KBH). The company’s Q2 2019 earnings report offered just enough to erase the negativity going into earnings but offered nothing to ignite renewed upward momentum. The company talked a great game with a lot of bullish commentary but the actual numbers and metrics belie the headlines. KB … Read more
Housing Market Intro/Summary In the last Housing Market Review, I pointed out how the stocks of home builders were still making a surprising push against the expected seasonal top in their shares. Yet, I still expected iShares US Home Construction ETF (ITB) to remain constrained to a pivot around its 50-day moving average (DMA). Soon … Read more
The breakout for home builders started with M.D.C. Holdings (MDC). MDC raised guidance and put strong emphasis on the positive expectations for its next earnings report. With analysts overwhelmingly bearish on the stock, the stock had plenty of upside surprise potential. The pent-up demand created a tremendous upward surge. Additional home builders are joining what … Read more
I have written plenty this year about the seasonal top in home builders. I even drew up a game plan to trade this pattern in a way to pay for the bullish trade that opens up during the period of seasonal strength. That seasonal top took its first good hit with a positive pre-earnings announcement … Read more
AT40 = 68.0% of stocks are trading above their respective 40-day moving averages (DMAs) AT200 = 55.1% of stocks are trading above their respective 200DMAs (essentially matches the 2019 high and is a new 10-month high)VIX = 13.3Short-term Trading Call: neutral (caveats below) Stock Market Commentary Good news is bad news….oops, nevermind The search for … Read more
Housing Market Intro/Summary After writing the last Housing Market Review, I was convinced a triple top had appeared in the iShares US Home Construction ETF (ITB). The May sell-off in the stock market pushed ITB into a breakdown below its 50-day moving average (DMA). Immediately after that post, ITB rebounded right through its 50DMA and … Read more
AT40 = 60.0% of stocks are trading above their respective 40-day moving averages (DMAs) AT200 = 52.4% of stocks are trading above their respective 200DMAsVIX = 15.1Short-term Trading Call: neutral Stock Market Commentary Trade War The search for news bad enough to convince the Federal Reserve to cut rates continues. The weekend began with news … Read more