Recently I have noticed a number of market commentators chiming in on social media about low mortgage rates and the strong housing market. When too many people point out something I tend to wonder whether the trend is overdone.
Let's check out the ETF in this space -- the (ITB) or iShares U.S. Home Construction ETF.
In the daily Japanese candlestick chart of ITB, below, we can see that prices appear to be "rolling over" the past four months. The high in October is like a head on a small head-and-shoulders pattern. The neckline of this pattern appears to be the $52 level. A weak close below $52 is likely to precipitate further declines. Prices are trading below the weakening 50-day moving average line.
The On-Balance-Volume (OBV) line has declined the past two months telling us that sellers of the ITB have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is weak.