While the market participants attention is mainly focused on the major indices, the Homebuilders ETF (XHB) is quietly making a new yearly high. Actually, XHB didn't hover so high since 2008. An obvious question is how far can XHB climb from here in the coming months. Let's take a look at the long-term P&F chart of XHB with 0.5 pts/box.
We see that three well defined lows were formed in 2009, 2011 and 2012. Vertical counts calculated from these lows point to 24.5, 26 and 25 respectively. Three counts calculated from three different locations give us a cluster of price targets in the 24.5 – 26 area.
I marked this area with a tan rectangle on the XHB monthly chart. By coincidence or not, this rectangle overlays the former support level from summer 2007 which turned into resistance later in 2008. So, this area is a reasonable price target where some consolidation/retracement is highly possible.
Disclaimer: I express only my personal opinion on the market and do not provide any trading or financial advice (see Disclaimer on my site).