** Bloomberg reported this morning that the homebuilders are back into the market buying up home lots at distressed prices- The example given was buying lots in Arizona for $30K that previously sold for $80K.
-Reason given = The homebuilders have sold off all their deadwood properties and sold off inventory and cleaned up their balance sheets and now are in the position that when they build and sell a property they have to replace it as soon as possible.
If you look at the chart of XHB you will see that it hit bottom back in March, then recovered to $15-16 and has been trading in a very narrow channel ever since. As most chart theorists will tell you- Often when a stock goes sideways for an extended period of time and then breaks out to the upside thaere will be a period of rapid follow thru-- AND THE LONGER THE STOCK HAS BOUNCED AROUND IN THE CHANNEL THE MORE POTENTIAL THERE IS FOR AN EXPLOSIVE UPWARD BREAKOUT!
Here's a chart which, although awfully busy, still shows in a wealth of diverse indicators that XHB is moving upward with increasing strength. Yes, there may be a pullback from these breakout levels now moving upward. But, as these indicators show- in almost every case the stock is showing HIGHER HIGHS and HIGHER LOWS.