Housing Construction Outperformance
- Posted by DynamicHedge
- on November 19th, 2012
One of the reasons that I’ve gone neutral when I saw trouble ahead rather than getting outright bearish is because of the continued strength in the housing recovery. Evidence continues to point to a very difficult bull market (one of the toughest). The signals are mixed and the price action is choppy, but the overall trend is still higher. For that to change the chart below will have to break first.
Below is a chart of the ratio of iShares Dow Jones US Home Construction ($ITB) and the SPDR S&P 500 ($SPY). As you can see from the chart, this has been a driver of the last bull run. While there was a slight underperformance of $ITB on the latest market pullback, now housing is outperforming once again on this bounce, with the market up over 1.5% as of this writing. Leadership will be passed if the rally is to continue (I’m looking at $XLF and $XLK), but the price action is constructive.
Disclaimer: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please click here for a full disclaimer.
DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
- 70 days of suffering in WalMart
- April is very bullish in a weird way
- Representativeness Bias: Easy Classifications
- Confirmation bias: A dependable filter of objective information
- Conservatism Bias: How to know what new information to focus on
- Sentiment Flip
- Pardon the interruption
- Wait for the market to flex
- How SPY typically trades after a gap up/down on NFP report
- Ebay Monster Gaps