Zillow is a falling knife

Over the weekend it was reported ZILLOW PAUSES HOME PURCHASES AS SNAGS HIT TECH-POWERED FLIPPING

For those not familiar with Z 's recent business model they have been on a buying frenzy no doubt fueled by low interest credit to give home sellers fast cash offers on houses based on prices that Zillow determines via their machine learning algorithms. It is a bold strategy Cotton; let's see if it pays off! That buying which has been going on unabated for months with ever rising prices seems to have hit a dip.

I would not call this the "top of the housing market" by any means but it is a data point we can refer back to should the future prove it to be a top.

Technically speaking the chart of Zillow is not pretty. I was long Zillow on the 50% Retracement over the summer but abandoned the position as it solidly broke the level. I am content to be out as it grinds lower from a risk management perspective. This is yet another reason to not baghold.

I would look for signs of reversal to perhaps get back in at a future time but right now price action on the broader trend is in no-man's land.