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Build a Position in Homebuilders ETF

by Sam Collins 09/18/09

SPDR S&P Homebuilders (XHB) -- This exchange-traded fund (ETF), which seeks to replicate the performance of an index derived from the homebuilding segment of a U.S. total market composite index, bottomed in March and made a direct run to the 200-day moving average by the end of April.

In mid-July, it executed a gold cross, which indicated that its long-term trend was about to change. And, by early August, it had broken the high of July, establishing an uptrend.

Since then it has been trading within a bull channel, and yesterday pulled back slightly from the channel's resistance line.

The buildup in buying volume suggests that the bull channel resistance at about $17 will be exceeded. With my target of $29, this could be a good time to enter XHB.

XHB closed yesterday at $16.15. ETF Connect tells us that the net asset value (NAV) is at $16.52.

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