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Unless one lives in a cave, most everyone knows Real Estate had a good deal to do with the economic and stock market weakness in 2007 & 2008. The DJ Home Construction index was a great “leading indicator” for the economy as it started turning lower back in 2005.
From 2008 to present, the Home Construction Index and IYR have reflected a ton of relative strength as they have gained over twice what the 500 index has off the 2009 lows.
Of late both of these Real Estate based tools above, hit a key Fibonacci resistance level while creating bearish rising wedges. At (A) in the above chart, both are breaking below support. For the first time in a long time, both of these reflected relative weakness yesterday, losing almost twice what the broad market, even though the Dow was down almost 200 points. One day does not make a trend, yet this weakness should be respected a ton!
The economy and broad market need this sector to remain strong….respect its message if it doesn’t!