iShares Dow Jones U.S. Home Construction Fund (ITB)
iShares Dow Jones Home Construction Fund (ITB): Play on the housing boomBy Michael Cintolo, Editor of Cabot Market Letter and Cabot Top Ten Trader
From Cabot Wealth Advisory 4/26/13 Sign up for free Cabot Wealth Advisory
Right now is one of those volatile market times; not only has the market been gyrating this way and that, but earnings season is in full swing, with many heavyweights releasing reports this week and next. I’m looking for many of the stocks I own or are watching to gap up strongly on earnings.
So far, the early returns are promising.
More than a few stocks have reacted well to earnings (GOOG, BEAV, ARMH, NFLX, etc.), including a couple that have shot ahead after multi-week rest periods. In fact, that’s one thing I’m noticing—many stocks that have been lackluster performers have sprung to life in recent days, as money rotates out of some extended stocks.
On that front, my stock idea for today is actually an exchange traded fund; it’s the iShares Dow Jones Home Construction Fund (ITB), which owns good-sized positions in all the U.S. major homebuilders—PulteGroup, Lennar, D.R. Horton, Toll Brothers and the like.
As you can imagine, ITB was a great performer for about a year as the new housing bull market took shape—the fund bottomed out in October 2011 at 8 (down from a peak of 64 in July 2005!!) and began trending higher; it reached 21 in October 2012 and actually recently nosed out to nearly 25 in March.
However, to me, the fund really has been in a loose consolidation since last October; the fund hit 21 at that point, and as of last week, it was trading at ... 21.5. Said another way, while homebuilders were leaders for much of 2012, they really have done little to get excited about during the past few months.
Now, however, I think that may be changing. An analyst upgraded the whole group earlier this week, and ITB, Lennar and other homebuilders bounced up off their long-term 40-week moving averages.
Given my long-term bullishness on the new housing boom (I think there’s years to run in the upturn), the long period of relative listlessness and the big-volume rally, I think you could consider buying a little ITB (or another housing stock) here and look to add shares if you get a profit of a few percent.
For information on Mike Cintolo's Cabot Market Letter, click here.
|iShares Dow Jones US Home Construction Fund (ITB)
|Category: Consumer Cyclical
Fund Family: iShares
Net Assets: 2.43B
Fund Inception Date: Apr 30, 2006
Legal Type: Exchange Traded Fund