Zacks’ Voice of the People Highlights user inthemoneystocks: “Housing Stocks Bounce After Bad Report” from the People & Picks community.
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Housing Stocks Bounce After Bad Report
Today existing home sales plunged lower by more than 27 percent in the month of July. This is very bearish news by any account, however, the home-builder stocks rallied higher. Usually when stocks rally during very bad news this is a bullish sign. However, the home-builder stocks have a habit of doing this. If you look at a daily chart of any home-builder stock since the late April highs you will notice the home-builders seem to catch a bid after bad news. This bounce higher in the home-builder stocks does not usually last very long.
This morning Toll Brothers Inc. (TOL) and Lennar Corp. (LEN) both rallied after the negative existing home sales news. These leading home-builder stocks have held the gains throughout the day despite the weakness in the major stock indexes. Please note that most of the home-builder stocks did make new lows for the year today.
Often a new low in the market will trigger short covering and a short term bounce as many traders and investors buy back in and cover their short positions. Therefore, don’t expect this bounce in the home-builder sector to last too long if recent history plays out again. These stocks could see new lows in the near future.
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LENNAR CORP -A (LEN): Free Stock Analysis Report
TOLL BROTHERS (TOL): Free Stock Analysis Report
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