Chart of the Day – Wednesday, July 10, 2024

Home Construction is one to watch right now

Here’s $ITB bouncing off support at the bottom of a 7-month consolidation range, which just so happens to line up perfectly with the 200-day Moving Average. pic.twitter.com/4NwMZdpTj2

— Grayson Roze (@GraysonRoze) July 10, 2024

Today’s Chart of the Day was shared by Grayson Roze (@GraysonRoze).

• Homebuilders and semiconductors led us into the bull market last year. While everyone was worried about a recession, these economically sensitive groups were hitting new highs, suggesting the economy was fine. However, the homies are currently at a critical juncture after stalling all year.

• The Home Construction ETF ($ITB) has spent the past week testing the neckline of a six-month Head & Shoulders Top, around $97. Grayson points out that this level coincides with its rising 200-DMA.

• Breaking this confluence of support would signal further downside for $ITB and the broader market. On the other hand, if bears can’t break the homies here, we could see a sharp rebound, as this would mark a Failed Top.

The takeaway: Homebuilders ($ITB) are testing the neckline of a six-month topping pattern, but if this bearish pattern fails, it will likely be bullish for $ITB and the broader market.