The iShares Lumber Related ETF (WOOD) has been stuck in a wide trading acreage for the better part of a year. Today it made a decisive move to the upside. Today it was the tallest twig on the chart. The SCTR notched its highest level in a year and the relative strength line made new 6 month highs. While this is a low volume ETF, there are a lot of good looking stocks in the forestry group. A lot of the Canadian Forestry stocks do well with a strong US Dollar. 4 of the top 10 Holdings in (WOOD) are non US based. They are also producing energy through cogeneration and some of the big US based forestry like Weyerhaeuser (WY) are structured as REIT's. What used to be a lumber pure play is anything but.
This particular ETF also holds container and packaging companies in the top 10. While the actual timber industry group performance is hard to see the forest for the trees, there is still upward pressure on these related stocks. The feedback from DR Horton Builders (DHI) today was very bullish and the news certainly didn't hurt the lumber related plays. But the lumber stocks are a little like the products they supply. A wide range of profiles all within the same general grouping!
Greg Schnell, CMT