Homebuilder stocks tumbled on Tuesday after a key sentiment gauge fell to its lowest level in the year.
That decline was tied to higher material and labor costs that have impacted housing prices and dampened demand. Home Depot also weighed on the group after it fell short on quarterly comps. Lowe’s will report before the bell Wednesday.
J.C. O’Hara, chief market technician at MKM Partners, says the day’s price action makes sense. Now he’s watching key levels on the XHB homebuilder ETF for where it could head next.
“Prices ran exactly up to the May highs, the all-time highs, and right now this pullback is creating what we call in technician’s language a double top. That is where bulls are in…