The DJ Home Builders ETF (ITB) broke out of a downtrend
yesterday (see the chart). The breakout has come on strong
volume. Furthermore, the market was able to hold the August
15 low when volume surged and the ETF closed higher after making a
new low on strong volume. The technical picture seems to
Banks see slower mortgage activity:
The breakout in the housing sector comes at a time when banks are
laying off workers in their mortgage units. At a conference
yesterday JP Morgan (JPM) said that U.S. mortgage originations
would be down 30% to 40% in H2 2013 compared to H2 2013. Wells
Fargo (WFC) also expected originations to decline.
Prices may restrict home buying:
Homebuilder Hovnanian (HOV) said it has been aggressively raising
prices, but sales had slowed with strong traffic. It sees
pent up demand and demographics as favorable big picture factors.
Yields remain high:
The 10 year treasury yield is having trouble falling due to the
heavy load of supply. 3, 10, and 30 year auctions occur this
week, and Verizon debt deal needs final pricing. The
Fed is likely to announce tapering later this month at the FOMC
: Do you think the housing sector has a chance for a meaningful
rebound from the May low or is the recent bounce a fade (are you
fading or believing the chart)?
Let me know your thoughts below:
ISHARS-7-10YTB (IEF): ETF Research Reports
ISHARS-US HO CO (ITB): ETF Research Reports
SPDR-SP HOMEBLD (XHB): ETF Research Reports
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