Is It Time To Cycle Into Housing?

In our “Wall Street Week Ahead” segment you often hear my good friend Joe Cusick from TradingBlock and me talk about housing data. Some would rather not think about housing, it may bring back some bad memories. But, that’s the point!

Housing, specifically home builders, are leading indicators. If you look back at the last peak in housing prices, 2006 and 2007, you would have seen that the home building stocks had peaked in 2005.

Take a look at the PHLX Housing Index HGX in 2005 and you see a peak, then sharp drop off, in home builder stocks. This was a full year in advance of the bust of home prices and REITS. The home builders ($HGX) were basing from 2008-2012, popped and based again from 2012-2014. We believe that the next leg for this sector is up.

Be on alert for these stocks: DR Horton Inc. DHI, Lennar Corp. LEN, and Toll Brothers Inc. TOL, to be on our Stock Focus List.

See you next time at the Corner!