Who Turned the Risk Off


Junior member
15 1
Home sales had a noticeable miss yesterday, and home builder stocks were down across the board. ETF $XHB is sitting at just under $30.70, although it did fare better than $ITB. The lesser of the two (IMO) fell by 1.2%.

The fact that the 5.08 million current annual sales-rate is still 15% higher than last year’s 4.41 million mark is a small consolation. Distressed sales also accounted for only 15% of home sales in June, down from May’s 18% – the lowest rate for such sales since 2008.

It’s often important to look at statistics within statistics to get a clearer macro-picture….and the downtrend in distressed home sales is a definite positive.

Mortgage rate spikes are what’s adding some pressures right now. But other than that, there really shouldn’t be head-wind catalysts to induce excessive selling. The Fed’s current tone suggests no imminent end to this era of free-flowing credit markets, and bullish technical pictures in the housing sector haven’t changed.

Market Tonality

I cannot stress the fact that today’s current environment embodies the “risk-on”, “risk-off” trade. That fact can essentially map-out trading strategies and give uncanny accuracy into future price-action.

Home builders fluctuate to this tune almost to a tee.

With the Fed’s credit-friendly tone, I see the housing sector as ripe for further upswings in price. The “risk-off” chord will drive investors away from bond-funds/Treasuries and away from the dollar.

Today wasn’t a huge party for equities, and earnings season will probably continue to be a mixed bag, but stocks remain the place to be. With that in mind, I’m predicting a near-term end to the somewhat sideways movement in housing.

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Traderchild | Market Commentary and Actionable Analysis
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