Macro Monday
SPDR Home builders ETF (XHB)
This equal weighted index tracks 35 holdings of the homebuilders segment of the S&P Total Market Index (TMI) and is spread across large, mid and small cap stocks.
These comprise of the Homebuilding sub-industry, and may include exposure to the Building Products, Home Furnishings, Home Improvement Retail, Home furnishing Retail, and Household Appliances sub-industries.
The Chart -
XHB
The Chart can be used as a leading indicator for the US housing market as the stocks in the XHB comprise of companies that provide the materials and products to build new houses and renovate homes. These products are higher up the supply chain and sold before construction commences or during.
In the past the XHB chart provided a significant advance warning of the 2007 Great Financial Crisis which is illustrated in red on the chart. A similar negative divergence would be worth watching out for in the future.
At present the performance of XHB is ahead of the S&P500. XHB is 5% from ATH’s at $87.00. This is in keeping with how this chart leads the market as it includes products and materials required for new builds and renovations. I would expect some resistance at the ATH which could act as a decision point for price. A break above the ATH with support established on it would be positive for price. A rejection off the ATH or a false break out and we would need to monitor price closely to see can price find support on the 10 Month SMA. If a lower high occurs on XHB (like in 2007), this could be an early warning signal of downward price pressure to follow on the S&P500.
As noted on the chart the average performance post MACD cross is a price increase of 80%;
- We are currently at $83.50 which is a price increase
of 21% from the recent MACD cross.
- A revisit of the ATH at $87.00 would be a price
increase of 26% from the recent MACD cross.
- An 80% average increase would lead us to the top
of the parallel channel (see chart).
- None of the above percentages are guarantees, we
are just looking at probabilities.
Factoring in that we are above the 10 month moving average and that it is sloping upwards, I remain positive about the continued performance of XHB, although I would not be surprised to see resistance at the ATH of $87.00 and a pull back to the 10 month SMA would be standard. If a weekly candle closed below the 10 month SMA, this is where I would start to get concerned and would then start to lean bearish. If we got follow through lower after that point, this would be alarm bells for me.
We can draw a correlation here to the first Macro Monday chart I shared on July 3rd, the Dow Jones Transportation Average Index
DJT
which also established a lower high as the S&P500
SPX
continued its ascent. Both the XHB and the DJT demonstrated they can be leading economic indicators by establishing lower highs prior to the 2007 Great Financial Crisis.
PUKA
SPDR Home builders ETF (XHB)
This equal weighted index tracks 35 holdings of the homebuilders segment of the S&P Total Market Index (TMI) and is spread across large, mid and small cap stocks.
These comprise of the Homebuilding sub-industry, and may include exposure to the Building Products, Home Furnishings, Home Improvement Retail, Home furnishing Retail, and Household Appliances sub-industries.
The Chart -
XHB
The Chart can be used as a leading indicator for the US housing market as the stocks in the XHB comprise of companies that provide the materials and products to build new houses and renovate homes. These products are higher up the supply chain and sold before construction commences or during.
In the past the XHB chart provided a significant advance warning of the 2007 Great Financial Crisis which is illustrated in red on the chart. A similar negative divergence would be worth watching out for in the future.
At present the performance of XHB is ahead of the S&P500. XHB is 5% from ATH’s at $87.00. This is in keeping with how this chart leads the market as it includes products and materials required for new builds and renovations. I would expect some resistance at the ATH which could act as a decision point for price. A break above the ATH with support established on it would be positive for price. A rejection off the ATH or a false break out and we would need to monitor price closely to see can price find support on the 10 Month SMA. If a lower high occurs on XHB (like in 2007), this could be an early warning signal of downward price pressure to follow on the S&P500.
As noted on the chart the average performance post MACD cross is a price increase of 80%;
- We are currently at $83.50 which is a price increase
of 21% from the recent MACD cross.
- A revisit of the ATH at $87.00 would be a price
increase of 26% from the recent MACD cross.
- An 80% average increase would lead us to the top
of the parallel channel (see chart).
- None of the above percentages are guarantees, we
are just looking at probabilities.
Factoring in that we are above the 10 month moving average and that it is sloping upwards, I remain positive about the continued performance of XHB, although I would not be surprised to see resistance at the ATH of $87.00 and a pull back to the 10 month SMA would be standard. If a weekly candle closed below the 10 month SMA, this is where I would start to get concerned and would then start to lean bearish. If we got follow through lower after that point, this would be alarm bells for me.
We can draw a correlation here to the first Macro Monday chart I shared on July 3rd, the Dow Jones Transportation Average Index
DJT
which also established a lower high as the S&P500
SPX
continued its ascent. Both the XHB and the DJT demonstrated they can be leading economic indicators by establishing lower highs prior to the 2007 Great Financial Crisis. PUKA
Comment:
Is everyone ready for this weeks crazy Macro Monday 4! ?
COMING UP!
COMING UP!
Comment:
It appears we have met the resistance that I suggested we might at the All Time High. Important to see what happens next.
This is looking double toppy however, if you review the ISHARES Home Construction ETF it has actually broken out higher than the XHB ETF. This could be a positive sign and we need to be watching what the ITB chart is doing also.
I will be covering ITB later today and may include XHB for reference purposes
This is looking double toppy however, if you review the ISHARES Home Construction ETF it has actually broken out higher than the XHB ETF. This could be a positive sign and we need to be watching what the ITB chart is doing also.
I will be covering ITB later today and may include XHB for reference purposes
Comment:
Still waiting on this chart to advise us if this is a double top or going to reach for the average 80% increase..... we have been stalled at the moment however we have an upwards style hammer candle on the monthly. It will be very interesting to see how this progresses. Still at a critical level with a true decision on price direction to be confirmed.
I will have an Macro Chart every Monday to help us anticipate the direction of the economy.
I see a lot of maximalists out there, some hate fundamentals, some hate Macro, some hate technical analysis.
My objective with MACRO Mondays is to merge all three by expressing / detecting / investigating economic patterns in the available charts which provide macro outlooks whose charts are ultimately driven from economic data.
Thanks Everyone
PUKA