First let’s check in with the overall market as a guideline, the S+P (curvy blue line is the long term average price):
Mr Bull is in control for now, but as I’ve been saying for the last week or so, this market is very extended and now overdue for a correction- it’s behaving more like a penny stock lately than a broad market index! I’d like to see the S+P cool off just above the 2,000 mark, staying comfortably above the 1,934 mark. But what counters this is that ‘tis the season to be jolly, and maybe the market wants to party on and worry about the hangover in January.
Meanwhile let’s take a look at what’s happening to the homebuilders. Below is the chart of the proxy for home construction:
Keep an eye on this one as I’m expecting it to follow the retailers and keep Main Street confident. After completing a classic ‘double bottom’ (W pattern) it’s bounced higher. If this chart of ITB breaks higher to $27 this will be very good news for housing and the consumer.
The author has an interest in the securities discussed in this article. Source of charts: stockcharts.com
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