It's time to start watching the homebuilding sector. We can look at this using the symbol XHB, which is an ETF based off the SPY.
The reason that homebuilders are interesting right now is because they have been outperforming all the other sectors in the US economy based on a 6-month range. Homebuilders are also performing very well on a 3-month range, though it's just a tad behind the transportation sector. Looking at the chart above shows that XHB has been in a compression range for the past month and could be looking to break all-time highs.
Let's look at couple of XHB's top holdings.
LOW is the symbol for Lowes Retail Company, which has clear resistance at about 171.
The chart has a positive stack, with the 10-DMA at the top, the 50-DMA in the middle, and the 200-DMA at the bottom. This shows a very bullish trend. With a clean break over 171, LOW looks poised to continue higher.
Another one to watch is WHR, Whirlpool Corp. This Home Appliance company is also sitting in a strong trend while holding its recent dips to the 50-DMA very well. The outperformance of this sector supports a growing economy as the demand for materials and labor in this area increases.
We've also seen a rise in home projects as COVID hit. It looks as though more free time gave people the motivation to do some work on home improvements. And it doesn't hurt that many people are leaving highly populated cites as they look for more spacious lower-cost housing due to COVID and job loss. On top of that, the devastation of wildfires across the United States creates the need for homes to be rebuilt, or for ways to protect existing homes from future natural disasters.
- S&P 500 (SPY): Tried intraday, but closed under the 50-DMA
- Russell 2000 (IWM): Rallied right to the 50-DMA before retreating
- Dow (DIA): Unconfirmed bullish phase; 270 pivotal
- Nasdaq (QQQ): 280 is the midpoint between September high and September low
- KRE (Regional Banks): Would like to see a close above 36
- SMH (Semiconductors): Still need to close above 175
- IYT (Transportation): Support 193.
- IBB (Biotechnology): Confirmed bullish phase
- XRT (Retail): Under 48 cautious; needs to clear above 50.30
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
