Thursday, August 15, 2013

HomeBuilders on the Radar

Interest rates are always a key focus on the media, and we see a lot of implications of the new normal of low rates.  The key sector that has had the largest leverage since 2009 to the Fed stimulus has been the homebuilders sector.

However, the talks of Fed tapering as early as September has been hurting the sectors and strategies that have all benefited from the low rates - home-builders, risk parity, carry trades.

We saw a purchase by Buffet for this current weakness in sentiment in the sector with a purchase in Prudential Fox & Roach Realtors.

There is a good entry for Annaly Capital Management seems to opening which I may open a trade tonight.
I like this trade due to the 11.50 area which is an obvious stop out if you get shaky hands when the tapering actually does hit the markets and if it hits the stock. The thesis is that the tapering is already priced in and the actual tapering will see this stock recover from the current price weakness.