End of Overbought Period for Stocks Ushers In the Bear – Above the 40 (January 4, 2020)

Stock Market Commentary The weakening overbought conditions finally gave way to a full breakdown. The abrupt end of the overbought period ushers in the bear. Ironically, trading started well with the S&P 500 (SPY) gapping slightly higher at the open. The selling pressure started after the open and did not relent until lunchtime on the … Read more

A Refresher for Extended Overbought Conditions in the Stock Market – Above the 40 (December 28, 2020)

Stock Market Commentary The stock market quickly moved away from its close call with overbought conditions to pulling off a refresher for extended overbought conditions. The acquiescence of President Trump in signing a heavily negotiated, highly contentious pandemic relief bill seemed to provide the spark for the buying in the major indices. The Stock Market … Read more

Divergence in the Housing Market: Slowing Stocks vs Soaring Data – Housing Market Review (October, 2020)

Housing Market Intro and Summary A divergence in the housing market is emerging between slowing home builder stocks and strong housing data. The housing boom in the U.S. continued to make its mark in the middle of the pandemic-induced recession. While new home sales took a bit of a pause in October, housing starts, existing … Read more

Seasonal Trade In Housing-Related Stocks Launches with Key Tests

This week’s housing data were impressive. The Housing Market Index (HMI) for October reported another all-time for home builder sentiment. Subsequently, starts for single-family homes hit a fresh 13-year high. Yet, the stock market yawned. Housing-related stocks demonstrated rare signs of weakness not seen in a long time. Several stocks suffered breakdowns below their respective … Read more

Housing Divergence: Full Recoveries, Uneven Earnings, Lagging Consumers – Housing Market Review (July, 2020)

Housing Market Intro and Summary The housing downturn ended almost as quickly as it began. V-shaped recoveries are evident across a spectrum of data, especially in home builder sentiment and new home sales. Home builders continue to describe extremely strong demand that, in many cases, goes beyond the release of buying power pent-up by the … Read more

Housing Downturn: V-Like Recoveries In Stocks Tug On Sluggish Data – Housing Market Review (May, 2020)

Housing Market Intro and Summary Could the housing downturn already be coming to a swift end? The stocks of home builders are delivering this message. They have enjoyed a very healthy rally and recovery from the depths of the March stock market crash. The challenges ahead are large: worsening economic conditions, unemployment at historically high … Read more

Meritage Homes: Stock Leads Home Builders In V-Shaped Recovery

A Startling V-Shaped Recovery Meritage Homes (MTH) has become a poster child for the near V-shaped recovery for housing-related stocks. MTH achieved a startling feat on the heels of a 3.5% gain: at its highs of the day, Meritage Homes reached its post-earnings stock price on January 30th which in turn was close to a … Read more

Animal Spirits in Housing Stocks Trampled by Virus Panic – Housing Market Review (February, 2020)

The iShares Dow Jones US Home Construction Index Fund ETF (ITB) dropped 13.4% in a week but managed to bounce off its 200DMA support.

Housing Market Intro/Summary The short-term outlook for the housing market is clouded by the current global turmoil generated by the coronavirus. The housing data discussed below were all collected before the virus came to the forefront of the minds of Americans. While demand for housing in the U.S. should remain strong (and certainly times like … Read more

Animal Spirits Rediscover Housing-Related Stocks

The iShares Dow Jones US Home Construction Index Fund ETF (ITB) is on a rare 6-day winning streak after confirming 50DMA support.

In recent weeks, the trade in the stocks of home builders provided timely reminders in the limited meaning in price action. The market periodically makes key “mistakes” that provide buying (or selling) opportunities. A Fresh Turning Point At the end of December, I described a “precarious divergence” between the stocks of home builders and the … Read more

Housing Market Review – Promising Start for 2020 Hits Market Pressures (January, 2020)

Housing Market Intro/Summary {Note a rough draft of this post was inadvertently posted on January 20, 2020} When I wrote the Housing Market Review for December, I described a “precarious” divergence between the performance of the iShares US Home Construction (ITB) and the S&P 500 (SPY). In late December, dour commentary from JP Morgan (JPM) about … Read more