ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Introduction When I wrote about the third quarter earnings for M.D.C. Holdings (MDC), I wondered aloud: “MDC’s next report on orders should deliver a very telling challenge to investor sentiment.” MDC seemed to deliver on orders in its Q4 earnings report, up 49% year-over-year and up 13% for the whole year. Investors were initially excited … Read more
Overall Assessment The stocks of home builders have had a banner year. The failure of the iShares Dow Jones Home Construction ETF (ITB) right at the climactic high of January, 2018 exposed a change in sentiment at an important juncture. So far, M.D.C Holdings (MDC) has suffered one of the most damaging changes in sentiment. MDC … 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
M.D.C. Holdings (MDC) delivered another bullish report on its order flow. After the market closed on September 12th, M.D.C. Holdings announced… For the first two months of the 2019 third quarter, net new home orders increased 63% year-over-year to 1,418…The increase was driven by a 40% improvement in the monthly sales absorption rate to 3.75 … 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