While chart watchers got fired up when a play on home builders broke out to a record high last month, the SPDR S&P Homebuilders ETF XHB  hasn’t done much since then.
MarketWatch columnist Kevin Marder and Adam Sarhan of Sarhan Capital were among the technical analysts who pointed out XHB’s bullish move above 34 last month. They weren’t necessarily noting its breakout as a buying opportunity, but rather emphasizing its importance for stocks overall.
“The builders made a move out to a new group high, offering a rebuttal to those who question the sustainability of the economic expansion,” Marder wrote. “As long as building shares remain in an uptrend, it is difficult to become too worried about the risk of another recession.”
On Wednesday, XHB neared its record again, gaining as much as 2% intraday after KB Home’s KBH  earnings beat expectations. But XHB finished Wednesday’s session down 0.1%.
Stocks in general sold off Wednesday as new Fed chief Janet Yellen hinted at sooner-than-expected rate hikes. Analysts noted the hikes could especially hurt builders, weighing on housing demand.
Todd Rosenbluth, director of ETF and mutual fund research at S&P Capital IQ, isn’t that excited about XHB. His shop has a neutral or “marketweight” rating on the ETF. He said their analyst team views some builder stocks as having gotten ahead of underlying fundamentals.
“We just think there’s lofty expectations,” Rosenbluth told MarketWatch. S&P Capital IQ is even less impressed with the iShares Home Construction ETF ITB , giving it an underweight rating. That’s in large part due to ITB being more heavily weighted toward builders, while XHB provides more exposure to other housing-related companies like Home Depot HD  and building-materials maker USG Corp. USG 
“We like building-products companies more than we like home builders,” Rosenbluth said.
On Thursday, Lennar LEN  was poised to deliver another boost to XHB, as it posted quarterly results that topped forecasts before the open. Investors also were keeping an eye out for a new reading on existing-home sales due at 10 a.m. Eastern on Thursday, as well as fresh figures on new-home sales that are expected Tuesday.
– Victor Reklaitis
Follow Vic on Twitter @vicrek.
Follow The Tell @thetellblog.
Source: http://blogs.marketwatch.com/thetell/2014/03/20/home-builder-etf-wavers-near-a-breakout-point-as-earnings-roll-in/?mod=MW_latest_news