The homebuilding sector has been and continues to be my favorite sector to trade. When market-moving news hits the sector, you can almost always find a laggard amongst the ~20 public homebuilders that hasn’t yet responded to said news, even hours after the headlines break.
When you start looking further out - say to building products (MAS, FBIN, TREX, etc.), DIY retailers (HD, LOW, FND, etc.), furniture names (RH, WSM, W, etc.), or brokerage / housing tech (COMP, ZG, OPEN, etc.) - you end up with considerable opportunities to trade laggard names.
Why does this opportunity to trade names that fail to price in news in real-time exist to such an extent? My best theory is that the most sophisticated housing investors are all directly invested in the primary asset class: real estate. Add to that the fact that few to no institutions have pure housing analysts or PMs (with most covering a much broader swath of industrials), and you end up with exceptional opportunities to scalp returns over short time horizons.
Let me give you an example situation to look for Tuesday, and then I’ll provide data supporting trades across every sector tied to housing.
