Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

---

The Dow Jones Home Construction index rallied over 700% from 2000 to 2005, and 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 below.

 

 

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 harvesting at least some gains here. Will see if "this time it's different!"

 

(c) Kimble Charting Solutions
blog.kimblechartingsolutions.com