From Dana Lyons: Housing stocks are down nearly 20% since our warning near the highs in January.
Back in January, we noted that one sector that had been on fire — housing stocks — was potentially at risk of cooling off. At least, that was our read on the group based on the chart of the PHLX Housing Sector Index (HGX). The HGX, at the time, had jumped more than 20% since breaking above its previous all-time high in late September. That high was set in 2005 near the 294 level. However, as we highlighted in the January post, the HGX had found its way up to 2 key Fibonacci Extensions near the 360-362 area:
- The 127.2% Fibonacci Extension of 2005-2009 Decline
- The 261.8% Fibonacci Extension of 2015-2016 Decline
In hindsight, we see that that juncture was indeed a good time to reduce exposure to housing stocks, as the HGX would top out just 7 days later, closing no higher than 365. And since then, it has been straight down for the HGX — to the tune of about -20%, as of yesterday.
So what’s next for housing stocks? Is there any hope for rebuilding nearby…or is the wrecking ball going to keep hammering this sector? In a Premium Post at The Lyons Share, we take a deep dive into the chart of the HGX and uncover a very clean and compelling opportunity.
If you want in on this opportunity, and the best way to take advantage of it, check out The Lyons Share. You can also follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!
Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.
The SPDR S&P Homebuilders ETF (XHB) was unchanged in premarket trading Monday. Year-to-date, XHB has declined -10.46%, versus a 2.06% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Dana Lyons, JLFMI and My401kPro.