Most of us remember the 2007-2009 financial crisis because of the collapse in home prices and its effect on the economy.
One key sector that tipped off that crisis was the home builders.
Home builders are an integral piece of our economy and often signal “all clear” or “short-term warnings” to investors based on their economic health and how one particular index trades.
In today’s chart, we highlight the Dow Jones Home Construction index. While it has climbed all the way back to its pre-crisis highs, the index immediately reversed lower from there.
This raises concerns about a double top.
The price reversal has the Index testing its steep rising up-trend support line at (1). If this important sector index breaks support at (1), it would send a negative message to the broad market.
Stay tuned.