The ITB, the homebuilder's ETF, has its highest level since January 2018. Craig Johnson, chief market technician at Piper Jaffray, thinks there could be even more room to run.
home construction ETF hit its highest level since January 2018 on Friday, and has soared more than 50% from its December bottom. Craig Johnson, chief market technician at Piper Jaffray, thinks there could be even more room to run for the group.
"One of the trends that most are honing in on is that interest rates around the world still continue to trend lower," Johnson said on CNBC's "" on Friday. "Despite the recent push up in the last couple days, you are seeing that trend continuing. ... Lower interest rates should be a positive for the homebuilders, and that's exactly what you've been seeing happening this year.
Johnson points out that the ITB chart is signaling a pattern that could mean the group could be building up to even higher levels. "You've made what looks like to us … an inverted head and shoulders bottom. We're kind of breaking above that neck line. Next resistance is around $46," said Johnson. It closed Friday at $43.23
An inverted head and shoulders pattern forms when a stock or ETF makes a lower low, an even lower low, and then a higher low. It typically indicates a downward trend is reversing.
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