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Homebuilders Near Crossroads At Pre Financial-Crisis Highs

Published 12/04/2019, 04:37 PM
Updated 07/09/2023, 06:31 AM
XHB
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SPDR S&P Homebuilders ETF

The latest leg higher for the bull market has been supported by a resilient U.S. economy that continues to climb a wall of worry.

And that theme has carried over to the stock market. This has helped stocks rise over 20 percent in 2019.

One core piece of the economy is the housing market, which shows up in sector ETFs like the Homebuilders ETF (NYSE:XHB).

After retesting the 2006 pre-financial crisis highs in early 2018, the Homebuilders fell sharply throughout the year. But 2019 has been a different story.

2019's rally has helped the broader stock market move higher and has the Homebuilders testing their financial-crisis highs once again at point (1).

A breakout here would send a strong bullish message but the pattern is that of a rising wedge, which can be quite bearish if trend-line support is broken.

If support breaks at point (2), the XHB would send a concerning message to the sector as a whole, the economy and the broader stock market.

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