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The Dow Jones Home Construction index rallied over 700% from 2000 to 2005, then it proceeded to lose 90% of its value in the following three years. This is a prime example of the effects of an Eiffel tower pattern. (see post here)
Since the 2008 lows, this index is now back at its 23% retracement level and created some patterns that suggest at least a pause is due in the index at (1) in the chart above.
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The DJ Home Construction index has reflected an enormous amount of relative strength compared to the S&P 500, gaining more than 80% in the past 10 months…
Is a pause in this index due? The Power of the Pattern suggests at least to harvest some gains here. Will see if “this time its different!”
