The latest evidence of the rebounding US economy appears in the housing sector. This once battered area has recently jumped to life with housing related sectors providing the best performance on the S&P 500.

Over the last three or four months, industry groups that supply home construction, equipment, financing and renovations have lead the charge on the recovery.

The Housing Index (HGX) has soared 52% since the low in October. In response, the iShares US home Construction ETF (ITB) has rocketed 56% since the beginning of Q4.

The housing market is a key gauge to the health of the US economy. Its rebounding strength highlights that the American economy is finally recovering.

Bottom Line: An economy can not fully recover without the housing sector coming onside. The strong upward movement of the HGX suggests the US should show additional signs of growth in 2012.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2012 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present. He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms. He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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