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Many have claimed that there’s no end is sight for this downturn, or recession or depression– until we see an uptick in the housing sector again.

Still others claim that until the banks are “fixed” and back on their feet, we cannot experience stable economic growth through strong credit support.

It appears each claimant is at least partially right, and moreover, that each of those sectors live and die together, wrapped in a form of symbiosis that is both mutually beneficial… and destructive.

This may all be “Master of the Obvious” stuff for you, but I figured I’d bring it to illustrative life for you anyway.  There’s not been much talk of the housing sector recently on these boards, and maybe that “out of favor” status is warranted.  Whatever the case, it’s clear that both housing and the bank index are again marching in lock step, and seemingly to their doom.

First I’ll show you $BKX –– no surprise for my readers, who’ve seen my starting to ring up purchases in the anti-bank index SKF because of this very weekly (sic) chart:

 

Note now that in comparison, I won’t use the Housing Index ETF– XBH— mostly because it’s made up of a lot of non-house building stocks.  Same with another housing index–  ITB — where some 70+%  of the stocks encompassed is not home builders but instead retail accessory places like Pier 1 and Home Depot.   No, I simply took the most popular name in the home building industry– Beazer Homes (BZH)– and ran the weekly chart.  The similarities are astounding:

 

And like $BKX, it seems BZH is readying for a rebound as well.  It makes no matter, I wouldn’t trust either as far as I could throw their Chief Investor Relations Officer.  These are sectors that are ripe for shorting at any major moving average (which on the weekly charts above would be the 13 and 34-week EMA’s).

Have fun and keep an eye on both for any profitable divergences.  Make no mistake, both sectors are hurting right now and should continue to do so into the near future.  That doesn’t mean a scalp won’t be available on the upside every now and again.

My best to you all.

 

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