Homebuilders in Focus

Spiders S&P Homebuilders ETF (XHB) pulled back off a recent 52-week high of $41.57 with current resistance at $41.25-$41.50. Continued closes above the latter could lead towards a surge to $43.50-$44 over the near-term. The all-time high high is north of $46 that was reached in February 2006 and when XHB started trading.

We mentioned earlier this month the breakout to multiyear highs above prior resistance at $39-$39.25 would be a bullish signal as this area represented June, August and early September resistance. Current support is at $40.75-$40.50 with a move back below $40.25 being a slightly bearish signal.

RSI is trying to clear resistance at 70 but is in a slight downtrend with a move above this level being a bullish development. The recent high cleared 80 and the 50-day moving average remains in a strong uptrend.