Existing home sales surged to a 5 ½-year high last month as more
first-time buyers loaded into the market. And with housing stocks near
multiyear highs, some traders think there's no sweeter place to put your money.
"I
think housing stocks are names you should continue to own here, especially in
the face of wages improving and jobs growth," David Seaburg, Cowen and Co.'s head of sales trading,
said Monday on "Power Lunch."
According to Seaburg, with an improving economic backdrop and
rate increase in the "foreseeable future," the housing market should
continue to see buyers piling in. "There's going to be a lot of people
trying to get ahead of this rate hike," he said. "And more
importantly, I think that when jobs do improve, they've been very concentrated
to the cities. I think that will spread out a lot more and it's going to spur a
lot of demand in suburban-type areas for housing."
Technical
analyst Todd Gordon agreed that there's a solid foundation in the space.
"We're seeing great relative strength" compared to the broader
market, said Gordon, also on "Power Lunch." The homebuilders ETF, which trades under ticker symbol
XHB, is already up 9 percent year to date, while the S&P 500 has risen 3 percent in
the same period. "We look to be on the verge of a technical
breakout."
The XHB has rallied more than 38 percent from its October low to
its March high, but since then has settled into a trading range. Now that the
ETF is testing the top of that range at $37.25, any break of that level could
mean significant upside, said Gordon.
"The
space looks good technically and I think there's a pretty good tail wind behind
this sector right now," said Gordon, founder ofTradingAnalysis.com.
"We'll look to play this to the long side."
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