Housing-related plays are working, and working big. Whirlpool (WHR) is breaking out. Sherwin-Williams (SHW) is doing so well. Stanley Black & Decker (SWK) is terrific. Home Depot (HD) always seems to be bordering on a new high.
How can this be? I think a couple of forces are at work.
First, the refinance money is flowing back, allowing people to spend a little more on their homes. Second, the disposable income factor from lower gasoline prices has a terrific positive ripple effect.
But there's also a judgment that it's worth it. We are far enough away from the Great Recession that people feel confident spending on their homes.
I still think stock investors don't recognize the damage done by the Great Recession. All sorts of spending had been cut back. The percentage of money spent on a home dropped dramatically. The percentage of disposable income for home improvements was so low that it is amazing these companies had any profits.
During this period these companies consolidated -- paint, tools and appliances are now pretty much all oligopolies -- and the big home improvement centers kept taking share from little guys. The technology and the supply chain management made that a given.
Now, I am seeing the HGX housing index break out, the homebuilders catch up with the rest of the market and these ancillary companies doing incredibly well.
I don't think it's over. I think they have more to run.