Housing has had a mixed week in terms of data. Existing home sale rose 7.4% in November, causing housing stocks and ETFs to surge yesterday.

But today came word that all is not well, as new-home sales sank 11% in November. Not good for those who build those new homes.

Let’s revisit the iShares Dow Jones US Home Construction (ITB), the housing ETF we supported as the truest representation of the homebuilders. Why? Because it actually includes homebuilding stocks among its top 10 holdings, whereas the more popular and well-known SPDR S&P Homebuilders (XHB) does not.

We noted last week that ITB was in a declining pattern of lower highs and lower lows. In addition, it was dealing with its descending 50-day moving average.

Well, ITB had a pretty good week, thanks mainly to yesterday’s strong existing sales data. The ETF popped above its 50-day and has broken — for the time being — the pattern of declining peaks. 

But ITB is far from out of the woods. The shares sagged today under the weight of the disappointing new-home sales numbers. Note also that the 100-day moving average is coming into play as resistance.

Finally, there are a lot of January call options open at the overhead $12.50 strike, which could add another layer of resistance. 

Trade Options to Get Richer, Quicker!
There has never been a more exciting time to be an options trader. And now, you can get the option information you need FREE each week. Sign up for your free subscription to Chris Johnson’s Market Edge newsletter today!