The last time we profiled ETFs based on Homebuilders was on Nov. 14 of last year, where we noted call buyers (we also noted similar bullish activity in the options in late August of last year) in iShares DJ U.S. Home Construction (NYSEArca: ITB).
The ETF has rallied a massive 33% since this mention last November, and related ETFs, SPDR S&P Homebuilders (NYSEArca: XHB) and PowerShares Dynamic Building and Construction (NYSEArca: PKB) are both up 33.4% and 22.7% respectively.
As general convention would suggest, Homebuilder and Construction related stocks are very sensitive to U.S. macroeconomic trends and data releases, and will tend to thrive as the overall U.S. economy and moreover the equity markets improve, and will generally sink if the opposite conditions are present. [Homebuilders Lead Sector ETFs]
Thus, since options do not typically trade in size in the Homebuilder ETFs with daily frequency, when they do we like to pay attention.
Last Thursday, we noted an influx of put buyers in XHB amid very heavy trading volume in the ETF throughout last week and from a performance standpoint, the sector ETF has been rather resilient recently to any temporary setbacks in the broader equity indices.
XHB for instance is up 5.86% in the trailing one month period versus the S&P 500 up 2.81%, and year to date has rallied 24.73% versus the S&P 500 up 12.13%. XHB closed Friday at $21.35 and is within a stone’s throw of a multi-year high of $21.99 that was touched early last week.
Even though the presence of put buyers has been limited to one trading session and is far from an observable trend at this point, we will be watching the sector with vigilance in the near term for further indicators that it will continue to challenge new highs or perhaps give back recent gains.
SPDR S&P Homebuilders
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