The housing stocks being out in front of the improving macro numbers is a concept I have been discussing for a while now. Back in February, I took some heat from the Calculated Risk blog for pointing out lumber’s bearish divergence.
Currently, the ITB is now negative on the year.
Moreover, here are the top five components of the ITB, ETF for the Dow Jones US Home Construction Index.
Unbelievably, they all have declining 200-day moving averages and thus the presumption of a bear market. A vicious bear trap (which we have seen before since 2009) to immediately heal these charts is what housing bulls are counting on, yet again.
| LENNAR CORP-A | LEN |
| DR HORTON INC | DHI |
| PULTEGROUP INC | PHM |
| TOLL BROTHERS INC | TOL |
| NVR INC | NVR |
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that’s an ugly chart…
Not pretty
Ouch – my RYL shares have been getting hit too.