Thursday, October 09, 2008

FIFO A.K.A. HomeBuilders

In the midst of the meltdown homebuilders ( CNBC says: "They were the reason, started is all, no, stupid greedy people in charge started it all and let "it" escalate" to the level of national and worldwide disaster) which started to signal problem first over 2 years ago, took a beating like none other - first, the very same homebuilders sold off as well with the rest of the market, but...surprise: most of homebuilders stocks did NOT undercut lowest lows, not just recent, but "absolute lows".

First I'd like to present slightly unusual chart ( one of the futures of ThinkOrSwim charting package) - chart of Beezer Homes MINUS Financial Spiders ETF XLF ( that is right - difference of two). As you see BZH in spite of market selloffs, corrections and so on steadily outperformed XLF, it is climbing in relation to XLF for most part of the year. Makes me think.





In light of that "discovery" which I believe under current market conditions pointing to homebuilders as being "strong group" take a look at few more charts - all of below represent defined risk long trades.





If not buying ( stepping in front of moving train) at least these stocks worth watching all the time, they might just provide reliable signal when "THIS" (selloff) is over.