“While the homebuilders have surged more than 9 percent since the election thanks, in part, to strong earnings and an improving economic outlook, the stocks have retreated in the past week and a half. But the troubles have been building for the last few years, according to Oppenheimer technician Ari Wald, who describes “mixed signals” in the charts of the home construction ETF ITB,” reports CNBC.
The equal-weight XHB mixes stocks such as Tempur Sealy (NYSE: TPX), Williams-Sonoma (NYSE: WSM) and Restoration Hardware (NYSE: RH) with pure play homebuilders such as Lennar (NYSE: LEN) and Toll Brothers (NYSE: TOLL) among others. Conversely, ITB is more of direct play on dedicated hombeuilders stocks.
Traders looking for a bearish play on homebuilders stocks can consider the Direxion Daily Homebuilders & Supplies 3x Bear Shares (NYSEArca: CLAW), which attempts to deliver triple the daily performance of the index XHB tracks. CLAW debuted last year.
“On the other hand, Harvest Volatility Management partner Dennis Davitt believes there’s still room to run for the homebuilders, especially given the industry outlook,” adds CNBC.
For more information on the housing sector, visit our homebuilders category.