Housing On Solid Ground?
The housing ETF, the ITB, is off to a fast start this year up nearly 9%. It is a good kickoff, but like in life these moves should be better admired on a long run basis instead of a sprint. To be clear I can count on a couple fingers how many of the housing related names are above both their 50/200 day SMAs. Below we look at the ratio chart comparing it to the S&P 500, and one can see it is more than holding its own. We are getting way ahead of ourselves here, but if this fund can get going, the good old days witnessed a robust move advancing 39 of 55 weeks ending between 1/6/17-1/19/18.
Unlikely Bulk Giant Winner?
The tale of two rivals. Of course one can throw WMT in the mix, but they do not have annual membership fees (BJ rejected a $3 billion takeover offer from WMT in ’11). BJ which came public last summer is looking for its first 5 week since it began trading, and this week is delivering strong relative strength, higher by 2.7% heading into Friday, while COST is lower by 1.5%. On a YTD basis BJ is higher by 14% while COST is up just 3%. It is being rejected at its 200 day SMA here after back to back ugly earnings losses of 5.5 and 8.6% on 10/5 and 12/14/18.
Leaders are leaders and laggards are laggards for good reason. One may not know the exact reason why, but PRICE action is indisputable on labeling best and worst of breed names. Below is the chart of VRA, and how it appeared in our 1/9 Consumer Report. It has made a very soft recovery compared to peers, and still trades 46% off most recent 52 week highs (after a nearly 20% gain during the last 4 weeks). The stock now trades in single digits, and has lost ground each day this week so far. The pivot came within pennies, but was not hit and illustrates the power of a downtrend.