Home Construction ETF (ITB) hits lower rail of channel and gets bullish signal
The housing industry has been pointing to a recovery for several months now and with the Fed expected to cut interest rates at the July FOMC meeting that should only help the turnaround. The iShares U.S. Home Construction ETF (NYSE: ITB) has been trending higher since the December low and a trend channel has formed since the beginning of the year.
The low closes from January, March, and last week connect to form the lower rail of the channel while the upper rail is less organized. The swings within the channel have been good for 8% to 12% upward moves and they have started with the stochastic readings in oversold territory and then making a bullish crossover.
The Tickeron Trend Prediction Engine generated a bullish signal for the ETF on June 28. The signal showed a confidence level of 88%. The signal calls for a gain of at least 4% over the coming month while 95% of past predictions on the ITB have been successful.
The housing industry is one of the most interest-rate sensitive industries. With growing pressure on the Fed to cut rates, the Chicago Mercantile Exchange Fed Prediction tool was showing a 65% probability of a 25 basis point rate cut.
ITB's RSI Oscillator slumps into oversold zone
The RSI Oscillator for ITB moved into overbought territory on February 21, 2025. Be on the watch for a price drop or consolidation in the future -- when this happens, think about selling the stock or exploring put options.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 2 days, which means it's wise to expect a price bounce in the near future.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where ITB advanced for three days, in of 329 cases, the price rose further within the following month. The odds of a continued upward trend are .
ITB may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on January 31, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on ITB as a result. In of 82 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 ITB turned negative on February 06, 2025. 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 .
The 50-day moving average for ITB moved below the 200-day moving average on January 22, 2025. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ITB declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for ITB entered a downward trend on February 21, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
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