Homebuilders ETF gets a bullish signal and the fundamentals support that signal
The home construction industry has been watched closely in the last few quarters. The housing numbers have been stagnant and declining in the U.S. and the Fed was in a rate-hiking phase up until December. Those two factors led to a selloff in a number of housing stocks and it caused the SPDR S&P Homebuilders ETF (NYSE: XHB) to fall sharply. After the low in December, the XHB bounced back, primarily as the overall market bounced back. The ETF did do something different from the rest of the market over the last three and a half months though—it formed an upward sloping trend channel.
We see on the daily chart how the highs from February, April, and May form the upper rail while the low from March and the recent low form the lower rail. The lower rail is very close to the 50-day moving average and that means the area should be a strong support level.
The Tickeron AI Trend Prediction Engine generated a bullish signal for the XHB on May 13 and that signal is predicting a gain of at least 4% over the next month. The signal showed a confidence level of 72% and previous predictions toward the ETF have been successful 86% of the time.
Due to how I use Investor’s Business Daily’s fundamental rating system, I knew there were several homebuilders with strong EPS ratings and SMR ratings. I looked at the 10 most heavily weighted stocks in the XHB and put together the following table.
These 10 stocks account for almost 50% of the holdings in the XHB on a weighted basis. As you can see, the average EPS score for the 10 stocks is 84.9. Using the traditional grading system of four points for an A, three for a B, etc, the average SMR grade is 3.2, or a B+.
What this tells me is that the companies that are held in the XHB have some pretty solid fundamentals.
XHB's Stochastic Oscillator is staying in oversold zone for 3 days
The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an uptrend is expected.
Technical Analysis (Indicators)
Bullish Trend Analysis
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where XHB advanced for three days, in of 323 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 315 cases where XHB Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on May 22, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on XHB as a result. In of 97 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for XHB turned negative on May 22, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 48 similar instances when the indicator turned negative. In of the 48 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where XHB declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
XHB broke above its upper Bollinger Band on May 18, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
Category ConsumerDiscretionary
| 1 Day | |||
|---|---|---|---|
| MFs / NAME | Price $ | Chg $ | Chg % |
| VIGRX | 137.25 | 0.42 | +0.31% |
| Vanguard Growth Index Investor | |||
| GSNPX | 16.17 | N/A | N/A |
| Goldman Sachs International Eq Inc P | |||
| WCMGX | 19.23 | -0.06 | -0.31% |
| WCM Focused Global Growth Institutional | |||
| PSCCX | 22.70 | -0.09 | -0.39% |
| PGIM Jennison Small Company C | |||
| RYPDX | 47.98 | -0.59 | -1.21% |
| Rydex Consumer Products A | |||
XHB and
Correlation & Price change
A.I.dvisor indicates that over the last year, XHB has been closely correlated with ITB. These tickers have moved in lockstep 98% of the time. This A.I.-generated data suggests there is a high statistical probability that if XHB jumps, then ITB could also see price increases.
