Housing Sector Stocks Weakening

The back up in interest rates since the Fed hinted at a Fall tapering of their QE program has put a dent in many of the housing related stocks.

Housing has come roaring back in many markets, but is still well below the peak numbers from the unsustainable period in 2006-'07.  It's hard to imagine the Fed slamming on the breaks too fast after they've worked so hard to get the economy going.

Yesterday, FOMC voting member and St. Louis Fed president James Bullard was out saying among other things, that the Fed needs to see more data before deciding on a taper this Fall, stating that FOMC and private market forecasts for growth have been too high.

We know that a mild tapering of QE doesn't stop the overall stimulus.  But the mere idea of less QE has moved rates higher in a short period of time.

Here's a weekly look at one housing sector ETF.  It looks to be forming a potential head and shoulders top similar to what occurred back in the summer of 2011 when the index fell over 27%.

SBA Communications - Falling Wedge Setup

(SBAC) has set up in a bullish falling wedge pattern.  Given the choppy action in the general market, this is for a short term scalp trade.

There's a decent short interest in the stock with 12.4% of the the float shorted.   It triggers over $73.64.

Always use stops to protect from big losses.

Click on charts to enlarge:

Short Term Trade Idea

Intel (INTC) has flashed a positive divergence in RSI over the last few days.  Here's a 15 minute, intraday chart showing the setup.

ALWAYS use stops to protect from big losses to your portfolio.

Would You Buy This Stock?

Below are 2 charts with very similar patterns.  Both have made big moves and recently experienced significant gap ups on very strong volume.

To the seasoned trader, both of these charts look extended and in need of a rest to consolidate the gains that have been made.

Here's the first chart.  The stock has already made over a 170% gain just in the time frame shown on this chart.

                                                Stock A

Now here's the second chart.  It has advanced over 180% in the 7 months shown in the chart.

                                Stock B

So what are these 2 stocks that made these big moves?  Do you own one or both of them, or are they at least on your radar screen?  (I altered the prices and volume numbers to disguise their identity)

The first chart shown is Tesla Motors (TSLA) as of the close on May 10 of this year.  Since that time the stock has advanced an additional 84% as of today's trading.

Here's an updated chart of TSLA.

The second chart is Yelp Inc (YELP) as of Friday's close.

The point of this post is not that you should buy a stock that is extended in price from a proper base structure, but rather not to dismiss the stocks that have already made big moves.  If you do, it's possible you'll miss out on the very best performers going forward.

Will YELP continue on as TSLA did?  No one knows.  But it should definitely be on your radar.