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Vitalii Liubimov's Avatar
published in Blogs
May 15, 2019

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.

 

Related Ticker: XHB

Momentum Indicator for XHB turns positive, indicating new upward trend

XHB saw its Momentum Indicator move above the 0 level on July 11, 2024. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 90 similar instances where the indicator turned positive. In of the 90 cases, the stock moved higher in the following days. The odds of a move higher are at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Moving Average Convergence Divergence (MACD) for XHB just turned positive on July 11, 2024. Looking at past instances where XHB's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .

XHB moved above its 50-day moving average on July 11, 2024 date and that indicates a change from a downward trend to an upward trend.

The 10-day moving average for XHB crossed bullishly above the 50-day moving average on July 17, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 12 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where XHB advanced for three days, in of 340 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The 10-day RSI Indicator for XHB moved out of overbought territory on July 19, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 52 similar instances where the indicator moved out of overbought territory. In of the 52 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 5 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

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 July 11, 2024. 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.

The Aroon Indicator for XHB entered a downward trend on June 28, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Fundamental Analysis (Ratings)

Fear & Greed

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 1.00% within the next month with a likelihood of 76%.

Notable companies

The most notable companies in this group are Johnson Controls International plc (NYSE:JCI), Owens Corning (NYSE:OC).

Industry description

The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index derived from the homebuilding segment of a U.S. total market composite index. In seeking to track the performance of the S&P Homebuilders Select Industry Index (the "index"), the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index represents the homebuilders segment of the S&P Total Market Index ("S&P TMI").

Market Cap

The average market capitalization across the SPDR® S&P Homebuilders ETF ETF is 24.79B. The market cap for tickers in the group ranges from 11.79B to 67.38B. TT holds the highest valuation in this group at 67.38B. The lowest valued company is ALLE at 11.79B.

High and low price notable news

The average weekly price growth across all stocks in the SPDR® S&P Homebuilders ETF ETF was 3%. For the same ETF, the average monthly price growth was 7%, and the average quarterly price growth was 17%. TOL experienced the highest price growth at 7%, while WSM experienced the biggest fall at -6%.

Volume

The average weekly volume growth across all stocks in the SPDR® S&P Homebuilders ETF ETF was -23%. For the same stocks of the ETF, the average monthly volume growth was -40% and the average quarterly volume growth was -25%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 63
P/E Growth Rating: 31
Price Growth Rating: 38
SMR Rating: 32
Profit Risk Rating: 15
Seasonality Score: 39 (-100 ... +100)
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General Information

Category ConsumerDiscretionary

Profile
Fundamentals
Details
Category
Consumer Cyclical
Address
SPDR Series TrustOne Lincoln Street Cph0326Boston
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Web
www.spdrs.com
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