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 and Summary The pandemic recession ended for housing in July. August demonstrated that an all-out housing boom is underway. I was expecting the housing data to start normalizing. Instead, demand pushed ever higher and supply tightened further. Housing Stocks Toll Brothers (TOL) started last week with a preliminary report on net new … Read more
AT40 = 24.4% of stocks are trading above their respective 40-day moving averages (DMAs) (ended 31-day oversold period)AT200 = 10.9% of stocks are trading above their respective 200DMAsVIX = 41.7Short-term Trading Call: cautiously bullish Stock Market Commentary “The Federal Reserve on Thursday took additional actions to provide up to $2.3 trillion in loans to support … Read more
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
On January 22, 2018, the iShares Dow Jones Home Construction ETF (ITB) closed at $46.25, a more than 10-year high. In just two and a half weeks, ITB lost 15.0% and did not bottom until the Christmas Eve market bottom at $28.55. Almost 10 months later, investors have almost reversed this entire loss – just … Read more
AT40 = 69.6% of stocks are trading above their respective 40-day moving averages (DMAs)AT200 = 56.3% of stocks are trading above their respective 200DMAs (13-month high)VIX = 15.3Short-term Trading Call: neutral Stock Market Commentary A Broken Record Last week had some big moments. Looking back, the week looks like a broken record. The Federal Reserve … 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
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
It was the soundbite on the U.S. housing market heard from near and far: Despite a healthy economy, we are seeing a moderation in demand. Fourth quarter contracts declined 15% in dollars and 13% in units compared to a difficult comp from 1 year ago. Fourth quarter demand flowed to a per community pace more … Read more
“Haters gonna hate.” That phrase was a great way for CNBC’s Jim Cramer to begin his monologue introducing his interview with Toll Brothers CEO Douglas C. Yearley. In 2018, investors have exhibited plenty of loathing for the stocks of home builders despite an on-going string of strong earnings results and the backdrop of a strong … Read more