U.S. Housing Market and Sector Stocks at Significant Crossroads

Housing-Market / Housing Stocks
Aug 23, 2010 - 11:45 AM

By: Tim_Wood

In 2005 I used cyclical analysis to identify the top in housing. That topping process was covered in a series of articles posted here in 2005 and into 2006, as the topping process matured and then eventually became obvious to all. Cyclically, housing is now at another important crossroads.

The Philadelphia Housing Index peaked in July 2005, which was some 27 months ahead of the equity markets. But, like the equity markets and most everything else, a low was found in early 2009. Please refer to the weekly chart of the Philadelphia Housing Index below.



I have been saying ever since that low was made that the equity markets have been in a counter-trend bear market rally. In accordance with Dow theory, this rally should prove to separate Phase I from Phase II of the much longer-term ongoing secular bear market. If so, then housing has likely not made its final bottom and we can again use cycles to guide us. In the chart below I have marked the intermediate-term cycle lows with an “Iâ€