Housing stocks have chopped in a very tight range since October, but now they’re trying to break out. This weekly chart highlights the ascending triangle on the Philadelphia Housing Sector Index. Notice how HGX made consistently higher lows while staying under 405 – that is, until last Wednesday, January 20. Interestingly, the news that day was bearish: NAHB’s...
HGX looks to be near the top of a wave 3 of 5, within a wave 5 overall. Expecting significant pullback in the housing market to start within the next year or two. This should be a wave 2 so we will not break the lows of 2009.
Potential head and shoulders pattern forming on the weekly time frame setting up for a reversal.
Fundamentally, the most probable reason for housing being at such high levels currently has to do mainly with the loan forbearance. This will not last for much longer as most of them will be expiring by the end of this year / early next year. Technically we can easily speak of this narrative and conclude that soon there will likely be a major correction in...
- housing in good position too... not sure for what yet :)