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May 16, 2005
Homebuilders bullish, for now, Monday, May 16, 2005, 3:44 PM
Every time there is a 100-point move either direction in the Dow, it pays to look at the winner/loser groups in the market to follow the money flow, and try to make sense of stock market direction.
Prior to today's close, the dow is up +106 points. Here is the movers' list:
You can see that the Construction Services (i.e., homebuilders) are one of the leaders. I warned readers on the weekend that might happen.
Here is what I wrote on Saturday: "As I did last week, and the week before, let me state: Before I start into my observations and analysis of the equity market sectors, I want to say that I continue to believe there is more downside to come in equity prices across all sectors. But there may be a trade before the bear continues to sink in its claws;.
This may be the only time in maybe 30 years I can recall that homebuilding growth continued unabated as mortgage rates rose. So for the homebuilders that cater to the very upscale market, there may be some very short-term trades on the long side, putting a smile on Larry Kudlow's face, but historical market correlations cannot be dismissed for long.
So, the homebuilders to the rich can build higher walls to their gated communities, and two golf courses instead of one, and the home prices can go from two million to three, for a while. But not forever, and when the downside hits, it can be a long slide."
What happened today to the homebuilders today?
All of them were up 3 to 4 pct. But, let's see what happens Thursday and Friday. That's when I close the trade.
Posted by Posted by Bill Cara on May 16, 2005 03:44:27 PM | Category: Cara Today in the Market
Are homebuilders going up because of dollar strength also? Just saw a survey where 75% of world wide currency strategists are now bullish dollar up from 52% recently. Maybe dollar top is near?
Posted by: Thomas Miller at May 16, 2005 4:04 PM [link]