by Chris Kimble
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Whether you rent or own Real Estate, the direction of Real Estate values is very important to the health of the overall economy! Unless you liver under a rock, I'm not telling you anything new when I share that the weakness in Home Construction stocks in 2005 and Real Estate back in 2006 had a big impact on the economy and stock markets in 2007/2008!
The rally over the past few years, after the huge declines in Real Estate, has been impressive to say the least. The 4-pack above reflects a variety of leading Real Estate index's, ETF's and one stock that is key to home improvements. What do they all have in common? After huge rallies they all formed bearish rising wedges with support lines being broke of late!
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On 5/3 the Power of the Pattern suggest "interest rates were ready to blast off and it could hurt bonds big time"! (see post here)
The above chart reflects that since the posting, the inverse bond ETF (TBF) is up 14% in 9 weeks...gaining as much in 9 weeks as the S&P 500 has Year-to-date. Could the sharp rally in interest rates be the reason that Real Estate has been week of late?
Josh Brown of the Reformed Broker, wrote an outstanding article back in October of 2012.....33 times, You poor dumb bastards (see article here) Josh wrote this article very near the highs in bond prices/lows in yields...a must read!
Regardless of the reason Real Estate has been week of late, what happens from here in this key industry will have an impact and ripple effects on the economy and stock markets going forward. Keep a close eye on the Real Estate industry in the weeks ahead, they will again send a key message for investors!!!
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