home builder traders

Discussion in 'Trading' started by silk, Apr 24, 2003.

  1. silk


    The home builder stocks have become nearly untradeable for day trading purposes. The daily ranges on these stocks have been piss poor for 5 weeks now. Often i've been seeing daily ranges of as little as 75 cents. Even through this weeks earnings, there were few good trading opportunities.

    Last year the daily ranges in these stocks was $1.5+.

    Whats puzzling is that the home builders are one of the top sectors in the mkt. With most of the stocks up 20-30% on the year. You would think that such a strong sector would have more interest. But instead volume has dropped off considerably as has the volatility.

    One hypothesis i have is that all the "shorts" who used to push this sector around, creating the volatility, have had their head handed to them. They thus no longer trade the stocks accept to cover their shorts periodically.

    Another hypothesis (conspiracy theory) is that some large mutual fund family, or families, has got this sector rigged. And are marching them higher as they please. A number of the companies have increased share buybacks, so maybe that has helped stabilize the stocks on a daily basis. If people know the stocks aren't going to break, then know one going to press their shorts ect.

    I guess all sectors have lulls in volatility/activitiy. The whole market went through this during the pre-war and war period. But now trading has improved 100% in the past 5 trading days. For somereason it hasn't kicked in yet for the homebuilders. I hope it comes back as they used to be my meal ticket.

    I'm going to make an effort to not trade the sector until i see some action heat up again. Because it has become a distraction to me and not worth my time.
  2. don't let them fall off your watchlist, the floor may be falling through in the next 9-24 months

    also, would you care to post the tickers you were following? i'd love to take a look.

  3. WinSum


    Yes, I agree with silk. Homebuilders stocks also puzzles me too. I haven't figure them out yet. It is too differcult to day trade or swing trade them. I stopped trading them last year. There are other easier stocks to trade.

    Too bad all the Homebuilders are on NYSE and are not on Nasdaq. I think it is the Homebuilder Specialist that is making it differcult to trade their stocks.


    The Primary Homebuiders stocks were: BZH RYL KBH LEN PHM CTX
    The Secondary homebuilding industry stocks in relation to low mortgage interest rate and refinancing plays were: FNM GS FRE MTG NTRS
    The Third homebuilding industry stocks in relation to suppliers such as Building Materials were: VMC YRK MLM
    GS and NTRS are the only ones that I find tradeable.
  4. lescor


    Agree, they used to be great traders, but most days aren't worth the risk. I trade LEN RYL KBH PHM TOL DHI. BZH and HOV gap too much and I don't like the fills from the CTX specialist.

    Winsum, I don't know how you can relate Goldman Sachs to trading the homebuilder sector.
  5. WinSum


    Goldman's Mortagage-Backed Securities business jumped from all the low interest home loans and refinancing. It is part of the declining interest rate play that drove up home valuation, spurred new home buying and refinancing.

  6. WinSum & Lescor,

    I am looking longer term so I have little to offer this exchange. Good trading, and thankyou both.

  7. Babak


    Don't forget NVR, very high priced and great for swings.
  8. lescor


    What, are you a fundamentalist or something? :p If the builders are moving and I'm looking to hit a few of them, GS wouldn't even enter into the picture. Now show me some action in leh and mwd and that's a different story.
  9. WinSum


    Yes, good guess. I started out as an Analyst for Wall Street many many years ago before becoming a day trader.

    Old habits dies hard. :D