Builder Breakdown?
Within the diverse consumer discretionary space, investors like to keep a close eye on the homebuilding sector. Of course, homeowners overall feel better about themselves the more valuable their properties are, but looking at the individual names the group feels heavy. That could change very quickly but the daily chart of the XHB below shows very little to like since the election last year. The ETF is down 25% from those highs and its WEEKLY chart shows how it undercut the very round par number, with consecutive doji candles, like a hot knife through butter the weeks ending 2/28 and 3/7. This will be influenced by the 10-year yield which did complete a bullish morning star pattern on 5/1, reclaiming its 200-day SMA in the process. Looking over the top 10 holdings is always an interesting endeavor with just one pure-play homebuilder within with PHM at number 9 (the ITB is a much better representation but the chart looks identical to the XHB). Imagine what the chart would look like if top-holding TT, which is on an 11-session win streak was not current. Notice how it has traded between the very round 300 and 400 numbers over the last month and it has acted strong since the completion of the bullish island reversal with the gap up on 4/30 (after the gap down on 1/27).