Lumber Vs. Homebuilders: The Great Disconnect
Candy Matheson | Aug 03, 2015 12:22AM ET
Lumber and the Homebuilders ETF (NYSE:XHB) have traded, essentially, in the same directions from mid-2010 until October 2014 -- when Lumber suddenly took a nosedive down to major support at 240, while XHB broke out and rallied -- as shown on the 5-Year Daily comparison chart, below.
At the moment, it looks as though that support level will be retested once more. A drop and hold below 240 could very well be the catalyst that breaks XHB's slightly-sloping (tight) uptrend. And, a drop and hold below 220 could see a very quick, sizable plunge in XHB...possibly slicing through 34.00 down to retest major support around 28.00, or lower.
Lumber and the Homebuilders ETF: two charts to monitor to see if the current spread between them continues to widen or shift.
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