Conclusion, Investment Implications, Strategy

The SPDR S&P Homebuilders ETF (XHB) is currently breaking overhead resistance to new all -time highs amid monthly asset expansion and relative outperformance versus the benchmark S&P 500.  As long as these positive factors remain true , this sets up an emerging low-risk opportunity to buy XHB and the Homebuilders-related stocks it represents.

Current Sector & Industry Group Ideas

Table 1 below is also accessible via the Sector & Industry Group Ideas rectangle at the top of the Research Center.

Chart 1

Click the table to  make it larger

This table also regularly appears in our weekly Keys To This Week: Sector & Industry Groups report published on Monday mornings.

Analysis and Rationale

The upper panel of Chart 1 below plots the SPDR S&P Homebuilders ETF (XHB) daily since July 2023 with its 200- and 50-day moving averages, widely-watched major and minor trend proxies.  The green arrow points out that XHB is currently breaking out to new all-time highs after testing, holding, and rebounding from underlying support at its 50-day moving average, currently at 92.83, over the past two weeks

Chart 1

The middle panel plots the corresponding total net assets (AUM) invested in XHB with its 21-day moving average, the latter to identify the monthly (our Tactical timeframe) trend of expansion or contraction.  The green arrow points out that these assets are rising back above their 21-day MA after testing and rebounding from their $1.5 billion July 2023 peak on Jan 7th and Feb 6th.  Expanding assets indicate investor conviction in higher prices.

The lower panel plots a corresponding chart of the daily relative performance between XHB and the S&P 500 (SPY) with its 63-day moving average, the latter to identify the quarterly (our Strategic timeframe) trend of relative outperformance or underperformance.  The green arrows point out that a new trend of quarterly relative outperformance began on Nov 14th, and that this trend is currently being tested and, thus far, is holding.

Together, these metrics suggest a Tactical decision point for XHB from a trend, asset flows, and relative performance standpoint — all which suggest an emerging Tactical long/overweight opportunity,