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Tuesday, May 22, 2012

Real estate and housing smack down

I am not sure exactly what happened in the real estate sector last week.  Maybe it was just selling related to the broad market.  Take a look at the weekly charts of XHB (home builders) and IYR (real estate) ETFs.

Both of these ETFs closed below their 18 week SMAs on an increase in volume.  We will have to see if there is follow through on the down side or not.  The XHB ETF has had quite a bit of upside volume on the rally this year.  Unlike most indexes that have broken down and formed tops, these charts have not.  It does look like we are getting close to a moment of truth though.  If they close back above their 18 SMAs before they close below last week's low, they could recover back to the old highs.  Another lower close would confirm a top of some kind is in place.  If you are involved in related stocks, I think it would be a good idea to pay close attention to them.


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