Market Pulse: Coronavirus Vaccine Could Be Bad News for Housing Stocks


Housing stocks benefited from the coronavirus pandemic, and now are looking sickly as hopes of a vaccine spread.

This chart shows the iShares US Home Construction ETF (ITB), with a potential head and shoulders reversal pattern. It’s one of the worst-performing corners of the market over the last month, along with bonds, gold miners and utilities.

One reason is expectations of higher interest rates making homes less affordable. However the sector faces another big headwind: inflation. Copper is back to its highest level in almost eight years. Lumber is the most expensive ever. Oil is also rebounding.

ITB also has a tendency to move according to yearly intervals. Notice how it started rallying in January 2017 and continued steadily higher until January 2018. A year later the whole process went into reverse and it rebounded. If these trends continue it could bode negatively in coming weeks, along with a potentially tradable downtrend.

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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.