Homebuilders were a surprise leader in the first half. But with interest rates staying high, bears could be moving into the neighborhood.
Today’s chart focuses on Home Depot. Similar patterns appear on related charts including
LEN
Lennar,
PHM
PulteGroup and
TOL
Toll Brothers.
The first issue is potential bearish divergence. HD made a six-month high on August 15. But notice how MACD, Wilder’s RSI and Rate of Change peaked earlier and were falling at the time. Those lower studies may indicate slowing momentum.
Second is the emergence of a potential falling channel. In late August, HD dipped below its price range from earlier in the month. It then peaked around $333 on September 1, which was about $5 below the August 15 zenith. In other words, a lower low was followed by a lower high.
Finally, the macro environment may be more difficult for housing. Optimism about supply and demand boosted sentiment earlier in the year. But now strong economic data could be keeping rates higher for longer. That may cause some anxiety and reality checks in the coming weeks.
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TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com/important-information.
Today’s chart focuses on Home Depot. Similar patterns appear on related charts including
LEN
Lennar,
PHM
PulteGroup and
TOL
Toll Brothers. The first issue is potential bearish divergence. HD made a six-month high on August 15. But notice how MACD, Wilder’s RSI and Rate of Change peaked earlier and were falling at the time. Those lower studies may indicate slowing momentum.
Second is the emergence of a potential falling channel. In late August, HD dipped below its price range from earlier in the month. It then peaked around $333 on September 1, which was about $5 below the August 15 zenith. In other words, a lower low was followed by a lower high.
Finally, the macro environment may be more difficult for housing. Optimism about supply and demand boosted sentiment earlier in the year. But now strong economic data could be keeping rates higher for longer. That may cause some anxiety and reality checks in the coming weeks.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com/important-information.
