Chart of the Day: Is This the Right Spot for Applied Materials?
Failure to break lower means the next move may be up.
Chart of the Day: Waste Management Proves Garbage Is Hot
With earnings tonight, WM is right at all-time highs after a tremendous run up this month.
Chart of the Day: Can Microsoft Save the Magnificent Seven?
Earnings are out this week and expectations are quite high.
Charting the Markets: Poor Weekly Closes Become a Pattern
Several uncertainties ahead are driving volatility in the S&P 500.
3 Stocks Bears May Want to Target Now
The charts of these names suggest more pain ahead. Here’s a trading strategy for each.
Chart of the Day: Broadcom Looks Bearish. A Time to Buy?
The colossal chip company is not immune to the selling in this sector. So is it a bargain here or not?
Breadth Is Positive? How Is That Even Possible?
Even in this carnage of selling there are some green shoots if you’re looking at places other than tech. Homebuilders are strong but so are Staples following some strong earnings out of Procter & Gamble ($PG). Perhaps a rotation to more safe and sound names but without the strong growth prospects is now in order.
Volatility is on the rise, but the biggest hits are in the Nasdaq, down nearly 2.6% at this point. Software names are well-bid and showing some strength; the Industrials actually went green for a moment.
Rotation is something we have seen quite often recently as money leaks from the former leaders into new groups. That is usually pretty healthy but certainly makes it feel worse if you’re in the most loved names that are being distributed.
Chart of the Day: Dell Got Hammered. Now We’re Watching for a Potential Entry.
We recently added this name to the Bullpen and believe this period will be the start of a sharp rise.
High Rates Are Not Helping the Homebuilders
The homebuilding sector, or the ($XHB) ETF, has been mired in a massive slump this year. We can directly see the cause as being high interest rates, mortgages are comfortably above 7%. That is a huge difference from just five years ago when a new housing boom and refinancings took place (started when Covid was the issue). Many of those refinancers have very low interest rates and not only won’t pay off their mortgage but they won’t sell their house, either. The conundrum is about supply — is there too much or too little? It seems buyers are out there but maybe credit is an issue, or job security. Demand for housing is weak, this week saw housing starts and permits in negative territory.
Whatever the case, homebuilders are not in the best shape. Every chart looks the same, lower highs and lower lows, our textbook definition of a downtrend. The XHB has been fighting the 20-day moving average and losing, but eventually we’ll see it base and then move above there with some strong volume, it is just not happening now.
When might the homebuilders start to shine? It may not be in 2027, when Fannie Mae predicts mortgage rates will average 7.5%, far above its previous forecast of 6.75%. Not good times for the homebuilders, but maybe this is the down cycle for the group. Keep an eye on long-term rates.