Housing Index At Resistance
Today one of the weakest groups were the home builders. As you can see in the above chart the housing index has rallied to a long term trend line on the weekly chart. On this last rally some home building stocks stopped going up such as CTX and BZH. There is also news that HSBC, New Century warn on bad loans. Toll Brothers also announced that they expect a 19 percent drop in home-building revenue. This triggered a loss of 2.7 percent in the Dow Jones U.S. Home Construction index
It looks like we may see a pullback from this level in the housing stocks.
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4 comments:
$HGX extended down again today. Doubled today's loss in the SPY. Would you short at this point or is the subprime shock over for this round?
Would you stay long Reits such as CT and NRF or take profits next week? They have had a nice run until today.
HI David, I would have taken profits in the home builders near the trend line if I was long. I don't know if I would actually want to initiate a short position just because an index is near a trend line. If you really want to short, I'd wait for a bounce so that the risk of the trade is much smaller.
Hey Catfish,
I think I would take profits, they all had a nice run.
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