With a backdrop of global trade cheer the stock market is bulling and just as importantly, the Fed has boxed itself into a dove stance in 2019. That’s not to say it will not reverse course, but Chairman Powell would look like a knee jerking day trader if he changes month to month based on what the stock market is doing.
All of this is a long way of saying that the backdrop (stable economy, bullish markets and interest rates well off the highs of 2018) for the Home Builders seems as good as for any other sector, if not better than many.
ITB was added per the Trade Log last week and here is what I saw on the daily chart. We’ve been noting its good performance for weeks since interest rates came back down, and last week it popped above both moving averages (for the 2nd time). It now appears to be settling to fill a gap and test the break in a bull flag. The break and gap were created with volume conviction.
This looks like a good place to buy/add with a super strict stop being a break of the bull flag’s orderly structure, a tight stop being a loss of both moving averages and a more lenient one being a drop below the March low of 33.28.
The weekly chart reminds us that the rally began from the equivalent of the support area (2100-2200) I had put on radar for SPX, but which has not been registered. Taking ITB and the Homies in general in a vacuum, they have already made a very important support test.
I would only be constructive on this as long as long-term interest rates stay muted and the economy remains okay.
A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the technical parameters are already noted. These updates are meant as a starting point for your further research if interested. I will not personally buy every item highlighted and will sometimes sell (ref. Trade Log) any item that I do buy below target (assuming I’ve not stopped out or sold for some other reason) as I often do. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.