Tuesday, April 17, 2012

What's Moving: SPDR S&P Homebuilders (XHB)

The XHB is up 1.5% at $21.11 but still down 1% since our March 31 post "Lumber Says This Is A Top For Housing Stocks" (ITB; XHB.
From What's Trading:
Homebuilders ETF (XHB) is up 26 cents to $21.06 and an Apr 21 – Jun 23 call spread trades on the ETF at 2 cents, 5385X and is possibly rolling of a bullish position ahead of this week’s expiration. April 21 calls are 6 cents in-the-money and have 29,637 in open interest. Yesterday, the NAHB’s Homebuilder Sentiment fell to 25 for April, from 28 in March and well below expectations of 29. Today, a report showed Housing Starts at an annual rate of only 654K in March, down from 694K and well below expectations (of 700K). However, building permits, which are arguably a better gauge of future activity, rose to 747K, from 715K and better than the 710K that was expected. By rolling from Apr 21 to Jun 23 calls (out to June and up two strike prices), today’s spread seems to be expressing confidence in the homebuilders for an additional two months.
Schaeffer's Research says:
Builder Stocks Bounce After 'Bad' Housing Data (LEN, TOL, MTH)
Today's housing starts data missed expectations -- but below the surface, there was actually some good stuff in the report. The main reason the number missed was because of a big drop in the more volatile multi-family segment of the housing industry. The single-family home starts weren't that bad.
In addition, building permits beat expectations, and housing stocks actually bounced after the data was released. The building permits number was also at its highest level since September 2008, so that development was well-received by traders. The SPDR S&P Homebuilders ETF (XHB) has extended its initial gap higher during the first two hours of trading, and is just above $21. Overall, this sector is still showing strength, and names like Lennar (LEN), Toll Brothers (TOL), and Meritage Homes (MTH) all have appealing charts.
5-Minute Intraday Chart of XHB
Follow up to "Lumber Says This Is A Top For Housing Stocks" (ITB; XHB)"
Institutional Sized Put Buying in Homebuilder Stocks (DHI; LEN; XHB)
AIG Back Into Mortgages = A Top For the Homebuilders (XHB; ITB)