Housing: Time to Let Bygones Be Bygones

Pursuant to the quotation above, it appears as though the homebuilders and indeed home construction sector at-large may have found something to love more than the bad habit of looking back at the housing bubble and shrugging off the notion of home ownership. And that would be the emerging theme of millennials buying starter homes. 

To be sure, we know the homebuilder sector is much, much larger than merely seeing Hipster Van Winkle move up the Hudson from Williamsburg to, say, Croton-On-Hudson, or a similar theme out west in Utah, Montana, and especially Colorado. 

But when we look at the long-term technicals for the XHB (sector ETF for the homebuilders), it may be enough for price to finally break free from the seemingly impossible $38 handle. 

Note how the $38 level served as the final stand for buyers in 2007 before an epic housing crash alongside the debt bubble and financial crisis (all intertwined, of course). So if bulls can remount this level this summer it will become a wildly bullish development, as this was the scene of a legendary crime in market history.

Long-time readers will recall that I have been, more often than not, skittish regarding this sector due to the overhead supply concerns. However, you will note the monthly XHB chart, below, illustrates the point that bulls have had adequate time in recent years to "work off" the overhead supply (or interested sellers). 

Inside Market Chess Subscription Services, we have some great ideal flow today regarding not just the obvious homebuilder plays but also some more subtle, ancillary ones too.