Chart of the Day - Tuesday, January 7th, 2020

Today’s Chart of the Day was shared on Twitter by @J4_fibo. It's a multi-year chart of the Homebuilders ETF, $XHB. The orange ratio chart in the bottom pane shows $XHB vs. the S&P 500. Some of the top holdings in $XHB include Home Depot ($HD), Johnson Controls ($JCI), and Lowe's ($LOW). The ETF has been consolidating below former highs for the past couple of months, as buyers attempt to digests the overhead supply leftover from the January 2018 highs. While this is somewhat constructive price action, it's hard to get aggressively bullish on Homebuilders until price breaks out above those former highs. Also, $XHB has failed to break out on a relative basis, suggesting further underperformance from this industry group.