Lumber’s declining prices are clearly proving to be a boon for CUT and WOOD, but aggressive, bearish traders may want to consider another way of profiting from lumber’s tumble. Housing stocks tracked by iShares Dow Jones U.S. Home Construction Index Fund (NYSEArca: ITB) have historically shown intimate correlations to lumber prices.
It pays to a remember some professional traders view lumber as a forward looking indicator and the last time lumber and housing prices diverged this widely, summer of 2011, housing shares subsequently sold-off.
ETF Trends editorial team contributed to this story.
Full disclosure: Tom Lydon’s clients own GLD.