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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

...If the dots don't connect, gather more dots until they do...

TGIF

TGIF

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IMPORTANT BLOG POST UPDATES...

Wednesday, February 15, 2012

Where's the Actual Value in the Homebuilders' ETF?

Data released today showed an increase in home builders' sentiment with respect to current and future single-family homes, as shown on the graph below.


However, as I discussed in my post of January 26th, new home sales still remain depressed at the lows of the 2009 levels where they've been since their decline began in 2006.

Contrary to actual sales data, the Homebuilders ETF, XHB, is trading up from its 2009 lows, and has bounced by almost 33% since its decline began in 2006 (see the Monthly chart below)...a difference of a gain in value of 33% versus the 0.00% gain in actual new home sales since 2009...makes me wonder what's driving the price of this ETF and whether it has actual value, particularly sustainable value.

As can be seen, price is sitting in the vicinity of Fibonacci and price confluence resistance and is currently held below that level in a trading range. I'd be skeptical of any breakout to the upside (and would question its sustainability) without seeing a dramatic and steady improvement in new home sales to back it up.

This confirms what I concluded in my post on January 31st.