August 9, 2013

What the Sudden 25% Collapse in Homebuilder Stock Prices Tells Us

From the profitconfidential.com

What the Sudden 25% Collapse in Homebuilder Stock Prices Tells Us
By Michael Lombardi, MBA for Profit Confidential

Homebuilder stocks are heading into dangerous territory and investors need to take note—even if they don’t own these stocks—because the move to the downside for this barometer of activity in the U.S. housing market is significant.

The most important factor that sets the fate of the homebuilder stocks is the housing market. If the housing market has growth potential ahead, then you can bet on homebuilder stocks to provide a stunning performance to the upside. If it’s the opposite scenario, with the housing market looking shaky, then homebuilder stocks usually tank. In other words, homebuilder stocks are very fickle, but they are also a great indicator of future activity in the housing market.

Right now, the U.S. housing market is being threatened by the mixed messages the Federal Reserve is sending to the marketplace.

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