With lumber declining in earnest for more than two months, it is not unreasonable to say ITB and XHB have positively diverged from the commodity that is consumed by so many of the ETFs’ constituents. That may not be a good thing.
“The last serious decline by lumber took place in early 2011. What did the S&P500 do after this lumber decline? SPY declined 17%, peaking in May of 2011,” said Kimble.
What happened to ITB and XHB in 2011? From mid-May through the end of the year, both ETFs lost about 7%.
SPDR S&P Homebuilders ETF
ETF Trends editorial team contributed to this report.