I dare to say I have been the biggest bear on the housing market on this blockchain. It all started with Toll Brothers in mid 2018 when I said to sell on the good news.
But thanks to Fed Powell putting interest rate hikes on hold and the housing sector being oversold, sentiments was bound to change. And now that it’s Spring, the peak time for home sellers, which last from March until May-June. But it’s not just about the sellers, the buyers need some love too.
The yield on the 10 yr is at 2.49, down from a high of 3.56, making housing the most affordable in 12 months.
Which has helped the SPDR S&P Homebuilders ETF, XHB increase almost 20% year to date, which is about 5% higher than the SPY.
But I’m still not feeling the housing market. So lets go to the charts to see if there are any set-ups to short XHB.
It’s not the prettiest monthly supply zone, but price is approaching the monthly supply.
However, price is currently in a weekly supply zone at $40.50.
But if price was to reverse and fall from here it would have to contest with the weekly demand at $36.50
Thus, one could take the trade short now once they see some reversal candles on the daily chart, which should still offer a minimum Reward to Risk ratio of 3:1. So, I would designate this as a day trade vs. a swing trade. The probability of this trade working increases only if the Feds gets a bit hawkish on increase interest rates.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.