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Overlooked Homebuilders ETF Ready to Rally


The SPDR S&P Homebuilders ETF (XHB) and the iShares U.S. Home Construction ETF (ITB) are the homebuilders ETFs that get most of the attention when it comes to this genre, but a rival fund merits consideration.

The PowerShares Dynamic Building & Construction Portfolio (PKB) is over eight years old and has $98.7 million in assets under management, but toils in obscurity relative to ITB and XHB. That despite the fact that PKB has outperformed its larger rivals over the past year.  [Building With Homebuilders ETFs]

PKB, which holds 30 stocks, could be poised to keep up the out-performance of it rivals.

“After breaking out from a strong base in December, PKB has stalled out and is now in pullback mode. The first pullback after a strong breakout is usually a good spot to add to an existing position, or to establish a new position if the original breakout entry was missed,” according to Deron Wagner of Morpheus Trading Group.

Wagner goes on to note that “although PKB undercut the 10-day moving average on Monday, the 20-day exponential moving average is just below. As such, there is decent support in the $21.80-$22 range.”

The fund currently trades almost 4% above its 50-day moving average and 9.3% above its 200-day line. PKB has not traded below its 200-day moving average in over a year.

The ETF tracks the Dynamic Building & Construction IntellidexIndex, which has comfortably topped the S&P Construction & Engineering Index and S&P Homebuilders Index over the past 12 and 36 months, according to PowerShares data.

PKB’s top holdings include Ingersoll-Rand (IR), Quanta Services (NYSE:PWF), Jacobs Engineerin (JEC) and Manitowoc (MTW).

PowerShares Dynamic Building & Construction Portfolio

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of XHB.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.