Just to illustrate a point made in this morning's post: Even as the S&P 500 Index has struggled to hold the upside in recent sessions, the homebuilder stocks have been outperforming, rising nearly 2% today. Above we see the relative strength of the homebuilders ($HGX) versus $SPX; note how relative strength has been on the upswing since the mid-July lows. News coming from the housing market has hardly been positive, but the homebuilder stocks seem to be looking beyond the current weakness. The rise in fixed income prices--the 10-year Treasury yield fell below 3.7% today--would seem to suggest economic weakness and a flight to safe yields. All the more interesting, then, that we're seeing relative strength among consumer discretionary and housing issues.
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