CNBC’s Jim Cramer said Tuesday that investors still have a chance to buy homebuilder stocks ahead of a potential run-up.
“The charts interpreted by Dan Fitzpatrick suggest that we are looking at a really counterintuitive bull market in homebuilders, and while that shouldn’t be happening at this point in the economic cycle, the bulls are still running,” he said.
The Federal Reserve has hiked interest rates to curb inflation over the last year and hammered stocks in every industry from tech to retail to financials. However, the performance of construction company stocks in recent months suggests that they are going against the tide, according to Cramer.
To explain Fitzpatrick’s analysis, he examined the daily chart of the Dow Jones US Home Construction Index.
The chart shows a classic reversal pattern that resembles an upside-down person, Cramer said, adding that this pattern could turn into sideways trading, as it did from April through late November.
“As Fitzpatrick sees it, homebuilders bottomed out in June and the group finally formed a new uptrend in December,” he said.
The relative strength of the Home Construction Index versus the SPDR S&P 500 ETF Trust, shown at the bottom of the chart, adds to the positive case for home stocks. The comparison shows that house stocks have been an “incredible outperformer” in recent months, he emphasized.
“The charts are screaming that it’s not too late to buy the homebuilders. In fact, you should still fist-buy them,” he said, adding that Fitzpatrick’s choice is lennar.
For more analysis, see Cramer’s full statement below.
https://www.cnbc.com/2023/01/10/charts-are-screaming-that-its-not-too-late-to-buy-homebuilder-stocks-jim-cramer-says.html The charts are ‘screaming’ it’s not too late to buy home construction stocks, says Jim Cramer