January 28, 2008 at 11:00 am by Tom Lydon
A handful of exchange traded funds (ETFs) that have been under the spotlight lately have been the real estate and homebuilder ETFs. For the past year, investors have seen the value of these ETFs drop between 40%-60%.
Today’s new home sales numbers emphasize just how bad the housing market has been hit; 2007 was the worst year in sixteen years, reports Martin Crutsinger for the Associated Press.
Interestingly enough, homebuilder and real estate ETFs have had a little jump lately while the conventional market indexes have felt some pain. Is this a sign that the worst may be over for homebuilders?
For those investors with a speculative eye, there may be a trade to be had. The SPDR S&P Homebuilders (XHB) ETF has been below its long-term trend line (200-day moving average) and short-term trend line (50-day moving average) for a long time. Recently the ETF has popped above the 50-day average. If you have the intestinal fortitude to take a position, we’d suggest using the 50-day average as a sell point.
For an interesting take on the housing market, be sure to watch Steve Kroft’s report on the subprime mortgage meltdown on last night’s episode of "60 Minutes."
Tags | Homebuilders, Real Estate
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