This ETF is comprised of mostly consumer cyclical and basic materials companies linked to the home building industry.
iShares US Home Construction (ITB)
from Positive Patterns
ITB is a ‘bet’ on the new home-building market and I like this chart very much. We can see the old highs in the $50 area in 2006, and the collapse and now the comeback. ITB reached the $25 area in 2013 and then stretched to the $30 area in 2015. You can see the sideways move that lasted a few years and now ITB looks like it is ready to breakout of this tight $25-30 trading range. Once this can close above the $30 area, we should be off to the races.
New home-building has lagged for almost a decade now; we are (very!) short of inventory. The real estate market is rising, because of lack of inventory, and new housing is badly needed. I see a big expansion in these numbers in the next 2-3 years
This is a gamblers trade & nothing more; this is not a buy hold investment. It’s for the next 3-5 years or so; not appropriate for widows and orphans.
ITB’s holdings include the usual home-builder/suspects. The largest holdings are Horton, Lennar, NVR, Pulte, Toll etc., plus other plays on home-building, including Home Depot and Lowe’s etc.
I like this rather than buying a specific home building stock. So, this is an all out bet that home building is going to pick up.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, February 28, 2017