This chart shows the in the iShares US Home Construction Index. It apparently tried to form a against resistance at $58.50 but never broke out. ITB is now at risk of breaking down if dip buyers back out.
Next, prices are under the 50- and 100-day moving averages, unlike most stocks in the market. That indicates the longer-term momentum is weakening.
Third, ITB's weekly chart shows a inside candle before Christmas. A outside bar followed the next week.
Finally, the last rally on December 17 and 18 resulted from Lennar’s better-than-expected quarterly results. The lack of follow-through suggests the market doubts the staying power of that positive news.
Investors could be wary of soaring prices for materials like lumber and copper . Even with home prices rising and inventories tight, profit margins could be at risk.
Note: This chart uses the custom script Smart Relative Strength.
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