Housing is Hot…

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

The consumer is read hot this holiday season. Macy’s ($M), Best Buy ($BBY) and Dollar Tree ($DLTR) have all seen a boost. The consumer ($XLY) is buying big ticket items, Homes ($ITB) are on the rise.

We had a robust existing home sales number, $5.26 million, which has the home construction sector ($ITB) at levels we have not seen since February. With new home sales due out next week, names that we have discussed in the past are on the radar. Lennar ($LEN), DR. Horton ($DHI), and Pulte Group ($PHM) are all piercing 52-week highs.

It is difficult to try to trade these names on the highs. You could look at the laggards for a potentially bullish idea into next week’s number.

We found KB Homes on our screen. It has a short-term bullish rating of eight. This stock has challenged its 200-day simple moving average of $17.48, which is now support. An in-the-money call spread in December, buying Dec 16 call and selling the Dec 19 call for $1.50, would be the type of strategy and name that we would be monitoring for a trade into the new home sales.

Have a good weekend, and see you next time at the Corner!