Housing Optimism Helps Gap And Go Attempt

This is an abridged version of our Daily Report.

Housing optimism

Confidence among those in the housing industry has jumped to one of the highest levels in 30 years. Similarly high levels led to poor returns in home building stocks, but good returns in suppliers like Home Depot and Lowe’s.

Over the next 3-12 months, there was almost no time when the home building stocks did NOT show a loss.

Gap and go…or no

Stocks gapped up at the open and never looked back, trading in record territory all day.

Similar jumps to the highest price in a year ultimately closed the gap, trading below the prior day’s close. It took an average of about two weeks and 1% in further gains before stocks slid back.

Put erosion

As we head into what is usually light holiday trading, options traders are seeing even less reason to subject themselves to the possibility of eroding values as prices rise or meander. The Total Put/Call Ratio dropped below 0.70 on Monday, one of the lowest readings in recent years.

Lots of optimism, again

More than 45% of our indicators are now showing extreme optimism. Since 2009, there have been 15 days with so many optimistic readings.

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