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November 1, 2024

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Homebuyers are still on the sidelines, waiting for better mortgage rates, while homebuilders are gearing up for a potentially strong 2025. Despite mortgage rates hitting two-year lows, buyers are holding back, expecting rates and prices to drop further.

Here’s the big question: Are we seeing the bottom of a downward cycle about to turn up? In other words, are we seeing the early stages of an uptrend in homebuilders? And if so, which homebuilding stock might you want to add to your ChartLists?

Let’s start by analyzing the homebuilders using SPDR S&P Homebuilders ETF (XHB) as a proxy. Take a look at the weekly chart.

FIGURE 1. WEEKLY CHART OF XHB. Note how XHB has been reacting to the 50-week exponential moving average envelope.Chart source: StockCharts.com. For educational purposes.

Since XHB crossed above the 50-week exponential moving average envelope (EMA envelope) in early 2023, note the ETF’s bullish reaction, bouncing within range of the channel’s uptrend. You can also use the EMA envelope channel to gauge the strength of the uptrend (the further away it is toward the upside, the stronger the trend).

The big question: Can XHB keep riding its current uptrend? The ETF has bounced off the 50-week EMA envelope three times in the past two years, hinting at a possible trend continuation.

But not all of XHB’s holdings are pure homebuilders—companies like Home Depot and Lowe’s are in the mix too. That means you’ll need to pick your stocks wisely. So, let’s pick the most liquid and recognizable homebuilder stocks and check their technical strength by looking at their StockChartsTechnicalRank (SCTR) scores.

Homebuilding Stocks Ranked by SCTR

The following table lists the six most well-known stocks in the XHB fund and their corresponding SCTR score.

What might this look like on a year-to-date basis in terms of market performance? To get a perspective on this, take a look at each stock using PerfCharts:

FIGURE 2. PERFCHARTS YEAR-TO-DATE VIEW OF ALL STOX STOCKS’ MARKET PERFORMANCE. Note that TOL, KBH, and PHM outperformed XHB.Chart source: StockCharts.com. For educational purposes.

Year-to-date, TOL, XBH, and PHM were the top performers, but, since TOL’s SCTR score was significantly higher, perhaps it’s best to zero in on TOL, letting the other ones go for the moment. Still, add all six to your ChartLists in anticipation of a broad homebuilder recovery. Once the industry turns upward, their SCTRs will likely show changes that might make some of them more suitable for a “long” opportunity.

We’ll begin with a long-term view of TOL’s weekly chart.

TOL: Three Year Look-Back

Similar to XHB, but perhaps even more so, TOL is exhibiting a clear uptrend that is gaining strong traction. Note the pin bar this last week, signaling strong rejection from the weekly session lows.

FIGURE 3. WEEKLY CHART OF TOL. There’s a clear uptrend in the weekly price action and the stock is outperforming XHB.Chart source: StockCharts.com. For educational purposes.

Above the chart, you can see TOL’s relative performance against XHB. Looking at how far the line has risen above the zero level, you can see that TOL is outperforming its homebuilding peers by over 68%. Let’s shift to a daily chart.

TOL’s Daily Price Action

FIGURE 4. DAILY CHART OF TOL. The Raff Regression Line best captures TOL’s cyclical movement within an uptrend.Chart source: StockCharts.com. For educational purposes.

For TOL, you might consider plotting a Raff Regression Line for the following reasons:

  • It identifies the trend direction.
  • It captures TOL’s wide cyclical movement while projecting a wide range of potential support and resistance.
  • It plots a clear channel to identify breaks and reversals.

With the regression line providing a clear picture of TOL’s trend, it’s best to use the On Balance Volume (OBV) to see the extent to which momentum supports (or diverges from) the price movement. In the example above, buying pressure aligns with TOL’s continued uptrend (see magenta line).

If you plan to go long, the best buying opportunity within the Raff Regression Channel typically occurs near the lower boundary (which attests to its recent bounce), as this area often serves as dynamic support and reflects potential price bounces. For risk management, placing a stop loss just below the lower boundary or beneath the most recent swing low is probably your best bet. This ensures protection in case the price closes below the channel, which could indicate a break in support and a potential trend reversal.

At the Close

Homebuilders are gearing up for a rebound despite homebuyers standing on the sidelines. If the industry begins showing green shoots of capital inflows (keep an eye on XHB to monitor this), it might present an opportunity to get in early on a potentially strong uptrend. But, until then, keep several homebuilding stocks on your ChartLists and monitor them regularly. For now, TOL is showing considerable strength, but, once the industry’s tide rises, it’ll take the strongest stocks up with it, so be ready.


Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Spain is reeling from its worst flooding in decades, after a year’s worth of rain fell in just hours this week in the country’s southern and eastern regions.

The storm began on Tuesday and has so far killed at least 95 people while dozens more remain missing. It has also flooded towns and roads, caused rivers to burst their banks and left thousands without power or running water.

Valencia, the worst-struck region, saw its heaviest rainfall in 28 years with people caught off guard and trapped in basements and lower floors of buildings. Vehicles abandoned in traffic were swept away by the rising water.

Emergency workers are still fighting to rescue those who are trapped, with operations underway to recover bodies and clear debris.

Here’s what we know.

Where is the worst damage?

Spain’s eastern and southern regions often see autumn rain, but this year’s downpour was unprecedented. Most of the deaths occurred in Valencia, which is located along the Mediterranean coast and is home to more than 5 million people.

The flash flooding in the region, a tourist hotspot during summer months, saw rural villages submerged in water and rendered main highways unusable on Tuesday night and into Wednesday.

A courthouse was turned into a temporary morgue in the region’s capital, the city of Valencia.

At least 40 people, six of whom were in a retirement home, died in the town of Paiporta in Valencia, Spanish state news agency EFE reported, citing its mayor.

Trains have been suspended in Valencia, as have other major public services in other affected regions. Schools, museums, and public libraries were closed into Thursday, according to the local government.

Flooding was also reported in and around the cities of Murcia and Malaga with more than 100 mm (4 inches) of rain falling in some areas. In Malaga, in the region of Andalusia on Spain’s southern coast, a 71-year-old British man died from hypothermia, the city’s mayor said.

What has the response been?

More than 1,000 members of the military have been deployed to assist in rescue efforts, Spain’s Defense Minister Margarita Robles said. Some areas can only be reached by helicopter.

Valencia’s regional leader Carlos Mazon told reporters early Wednesday that bodies were found as rescue teams began to reach areas previously cut off by the floods. As of Thursday morning, emergency services said they had reached all the affected areas.

The Spanish government sent emergency alerts on Tuesday asking people to stay indoors or seek high ground. Extreme rain warnings were put in place for some areas including around Valencia, according to Spain’s Meteorological Agency, AEMET. These warnings called for the potential of 200 mm (8 inches) of rain in less than 12 hours.

In some locations, the rainfall estimates were exceeded in even shorter periods of time. Chiva, which is east of Valencia, received 320 mm of rain in just over four hours, according to the European Severe Weather Database. The Valencia area averages 77 mm (3 inches) for the entire month of October.

However, many people were caught off guard, leaving it too late for them to seek safety. Some took to social media to vent their frustrations, claiming that they received the emergency alert in the midst of the storm.

Hannah Cloke, a professor of hydrology at the UK’s University of Reading, said the high death toll suggests Spain’s regional emergency alerts system failed.

“This suggests the system for alerting people to the dangers of floods in Valencia has failed, with fatal consequences. It is clear that people just don’t know what to do when faced with a flood, or when they hear warnings.”

Spain’s Prime Minister Pedro Sanchez offered support, pledging his government would do all it could to help flood victims, as he urged people to remain vigilant.

Sanchez visited Valencia on Thursday, where he instructed people to “please, stay home, don’t leave,” adding that “the damage continues” and the priority is to save as many lives as possible.

The Spanish government has also decreed three days of official mourning, starting on Thursday.

Thousands in Valencia’s suburbs were still without power and running water on Thursday, as search operations and debris clearing continued.

The Spanish Securities and Emergencies department has issued weather warnings for many regions. Orange and yellow alerts remained in place in isolated parts of Valencia, while rain continues in Castellon, a province to the north.

Extreme weather warnings continue for portions of eastern and southern Spain, according to AEMET, with more rain expected.

What caused the disaster?

The torrential rain was likely caused by what Spanish meteorologists call a “gota fría,” or cold drop, which refers to a pool of cooler air high in the atmosphere that can separate from the jet stream, causing it to move slowly and often lead to high-impact rainfall. This phenomenon is most common in autumn.

Figuring out the precise role climate change played in Spain’s devastating floods will require further analysis, but scientists are clear that global warming, driven by fossil fuel pollution, makes these types of extreme rainfall events more likely and more intense.

Hotter oceans fuel stronger storms and the Mediterranean hit its highest temperature on record in August. Warmer air is also able to hold more moisture, soaking it up like a sponge to wring out in the form of torrential rain.

“We can’t say anything on the fly,” said Ernesto Rodríguez Camino, senior state meteorologist and a member of the Spanish Meteorological Association. He added though that “in the context of climate change, these types of intense and exceptional rare rainfall events are going to become more frequent and more intense and, therefore, destructive.”

How does this compare?

This week’s floods are the most deadly Spain has suffered in decades.

In 1959, 144 people were killed by a flood in the Spanish town of Ribadelago. However, that disaster was caused by the failure of a dam, releasing water from the Vega de Tera reservoir, rather than a natural event.

The last comparable natural disaster was in 1996, when floods killed 87 people near the town of Biescas in the Pyrenees mountains.

While Spain has experienced significant autumn storms in recent years, nothing comes close to the devastation wrought over the past few days.

The disaster is on a similar level to flooding seen in Germany and Belgium in 2021, which killed more than 230 people.

This post appeared first on cnn.com

Dropbox is laying off 20% of its global workforce, the equivalent of 528 roles, CEO Drew Houston announced Wednesday in a note to staff.

The company is in a “transitional period” as its file sync and share business and its Dash artificial-intelligence search feature mature, Houston wrote.

“Navigating this transition while maintaining our current structure and investment levels is no longer sustainable,” he said in his note.

The move follows a 16% cut to Dropbox’s workforce in April 2023, which affected 500 staffers. At the time, Houston wrote that the cuts were due to slowing growth, economic headwinds and the need to invest more resources and head count into the increasingly competitive AI race.

Dropbox will be making cuts to the parts of its business where the company is “over-invested or underperforming” while working toward a “flatter, more efficient” team structure, Houston wrote.

“We continue to see softening demand and macro headwinds in our core business,” Houston wrote. “But external factors are only part of the story. We’ve heard from many of you that our organizational structure has become overly complex, with excess layers of management slowing us down.”

Affected employees will receive 16 weeks of pay, starting Wednesday, with one additional week of pay for each completed tenure year at the company.

This post appeared first on NBC NEWS