NEW YORK ( TheStreet) -- Homebuilding is an important segment of the U.S. economy, and the stocks in this group continue to have their ups and downs. In this environment homebuilder stock ratings have been flip-flopping between buy, hold and sell. This volatility should continue to provide buy-and-trade opportunities.
On Sept. 26 I wrote,
Homebuilder Volatility Provides Trading Opportunities and on this date the
PHLX Housing Sector Index
The weekly chart for the housing sector index shows the decline from its mid-2005 high to its March 2009 low and the subsequent rebound back above its 200-week SMA as 2012 began. The 200-week is now at 130.31. The chart also shows that the 2013 trading range has been influenced by the 50.0% and 61.8% Fibonacci Retracements of the entire housing crash. These key levels are 174.17 and 202.51 respectively. As this index declines towards the low end of this range, homebuilders tend to be upgraded and be near tests of value levels. At the upper end of this range the homebuilders tend to be downgraded near tests of risky levels.
Chart Courtesy of MetaStock Xenith
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