Stock Ideas 
Market Watch XHB appears ready to provide a shorting opportunity
Market Watch XHB appears ready to provide a shorting opportunity 
Market Watch
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| XHB appears ready to provide a shorting opportunity |
| Thursday, 25 October 2007 | ||||||||
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The SPDR Homebuilders (XHB) has been one of the stronger performing ETFs this week, popping around five percent (as of late Wednesday). But XHB is now in technical resistance territory, sitting just below its 20-day moving average. And the 50-day moving average looms overhead near 23.20. Note how both trendlines have kept the fund in a steady downtrend for more than four months. Why do I point it out? Investors have been trying to call a bottom to housing stocks on any sliver of hopeful news. Looking at the extremely low XHB put/call ratio, it’s strikingly clear that the sector remains loaded with bullish sentiment. This tells us that there continues to be those trying to catch the falling knife that's traveling too fast to see. As such, XHB appears ready to provide a shorting opportunity. While the current level (a little above 22) is tempting, a move to the 50-day at 23.20 would likely be a slam dunk for the shorts. The bottom line is that XHB is deeply entrenched in both a fundamental and technical bear market, and investor sentiment reveals that investors are still sliding down the "slope of hope." Yesterday’s lousy home sales numbers certainly won't help pull the sector out of its funk. Source : Investors Daily Edge
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