Homebuilders Lead Market Higher

Index performance this week:

This week we find that the broad-based rallied continued as nearly 90% of the ETFs that I track were higher (click to enlarge):

The SPDR Homebuilders (XHB) fund was the standout leader as housing stocks surged (for lack of a stronger word) on Thursday amid a plan by the government to freeze some subprime rates.

As the weekly chart below shows, the XHB has struggled for much of the year - shares have been locked in a steady downtrend. This week's bounce comes as the ETF hit a yet another new all-time low last week.

Based on the chart, I think it is too early to call the weekly downtrend broken, but that is something to watch for. Technical turnarounds can proceed the fundamental turnaround. In other words, the market tends to be a discounting mechanism and looks forward.

Index performance year to date:

Comments

[Greg Pinelli:]

Larger than a dead cat bounce..of which there have been 6 or 7 (depending on one's standards)...smaller and less sustained than a turnaround..I call it a very nice near tern profit taking opportunity. Investors should have taken note in late November that XHB was very
beaten down..With rate cuts and other liquidity manipulations sure to come it was a nice buy around 17.50..Take profits now..or early next week before reality once again sets in..and wait. This mess is a long way from over.

2007 Dec 08 10:24 PM

[WAKEUP:]

Homebuilders are not "leading" anybody anywhere, except into a deep recession. This article is sheer fantasy, of the deliberate sort.

2007 Dec 09 12:13 PM

[UltraShort:]

Time to short XHB, that is right after the interest cut tuesday and before the close of the day. Won't see another temp high (yeah right 'high') for a year or so.

2007 Dec 09 02:06 PM