From the Desk of Ian Culley @IanCulley
Today’s analyst meeting was one broken record after another as we ripped through the most important charts on the market.
Not a top, never hit oversold…
Not a top, never hit oversold…
There’s a raging bull market on Wall Street right now.
But the fun and games will come to a screeching halt if the following chart rolls over.
Check out the economically sensitive Home Construction ETF $ITB:
ITB checks both boxes. It never hit oversold levels and is only a top if it breaks below 97.
Plus, it’s ripping!
Of course, we need a decisive resolution above the March high of 116.34 to confirm our bullish bias.
But if the next bull run has legs, ITB will post new all-time highs.
That also means lumber futures have to stop falling.
Futures have slid more than 28% beneath the March peak. If buyers are ever going to step and support higher lumber prices, this is it!
The 450 level acted as resistance for twenty-plus years but is now forming a critical support area.
Buyers have defended the lower bounds of this polarity zone in 2021, 2022, 2023, and earlier this year:
Will they do the same today?
A break above 500 would be constructive, corresponding with a downtrend line violation and a potential bullish reversal:
Traders: Track a September contract breakout above 494.5. A decisive close above that level sets a rough target of 600 (shelf of former highs from last year).
I’ll pass since I don’t trade lumber. (I like the bullish divergence forming on the 14-day RSI, though.)
Whether you trade the futures contract or not, a rally for lumber is a rally for homebuilders and the broader stock market.
Stay tuned for further bull market confirmation from the commodity space.
–Ian
COT Heatmap Highlights
- Commercials pull within three percent of their largest short position for coffee in three years.
- Commercial net-short positioning for silver hit a new three-year extreme.
- Commercial hedgers carry their largest short position for the British pound in three years.
Click here to download the All Star Charts COT Heatmap.
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