Dojis in the Driveway:
The homebuilders have been a big contributor to the success of the discretionary space as seen here on the MONTHLY ratio chart from the start of 2021 to late 2024. A bearish head and shoulders may let another subsector, perhaps the automobiles with TSLA, take the baton but they are a key group to focus on. They can be influenced by the direction of interest rates, most notably the 10-year yield, which is now sporting a bearish head and shoulders formation, and a break below 4.1 carries a measured move to 3.4% which will not only put a likely bid under the WEEKLY chart of the XHB below, but the overall market as well. The dojis in the driveway reference should have investors in the homebuilding space ready for an entry above the very round par number which would set up an add-on buy point above a double-bottom trigger of 113.20. Among the large-cap names in the space, PHM is one to watch. It recorded positive RSI divergence in December and February and is holding the very round par number well in a bear flag formation. If it can break ABOVE 105 look out to the upside above.