The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday.
In a similar vein to the financials, the homebuilders also cooled off at long-term overhead supply. Simply put, buyers at a previous major price level wanted to get out once they were made whole and price came roundtrip.
As you can see on the daily chart for the homebuilder sector ETF, the past several months have been a complete waste of time for the space. Tons of backing, filling, and whipsaws right at long-term overhead supply, which you can see on the monthly chart, second one below, dating back to 2006/7.
Once again, though, bulls can argue that enough time has been spent working off said overhead supply. And the good news for them is that price has not been violently rejected lower for neither the financials nor the homebuilders.
While far from a guarantee, a meaningful and prospective rotation into the homebuilders should also be respected. Unlike many banks, most individual homebuilders still have plenty of technical damage to overturn, namely a bevy of declining 200-day moving averages.
A homebuilder like BZH would be an exception, though, buyable on and orderly consolidation.
Also note derivative housing plays, such as the retailer BBBY, seen on the weekly timeframe. Further strength over $78 may see a nice sympathy long to the housing plays if the sector rotation proves true.
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In case your thinking of part 3 .One word….Godfather!
LoL!